December 11, 2008
R&FF Retailer: Target’s Goal: ‘Not Yet Achieved’
By Warren Thayer, Editorial
Director
Through a
special arrangement, presented here for discussion are excerpts of a current
article from Refrigerated
& Frozen Foods Retailer magazine.
One dictionary definition
of ‘target’ is ‘a goal to be achieved.’ Some would say that Target is getting
closer, but still hasn’t found the bulls-eye.
The good news is that
Minneapolis-based Target is moving to self-distribution of perishables,
which will almost certainly make it more competitive. It also hires terrific
young buyers/managers and its SuperTarget stores
are clean and bright.
The bad news is that SuperTargets still
seem unable to translate the company’s brilliant fashion savvy over to
the food side. Those buyers/managers are often inexperienced and rotated
in and out of jobs too quickly. And there is consensus among those we interviewed
that the perishables areas of those clean, bright stores are sadly lacking
in traffic.
Most observers say the
Archer Farm brand is doing a decent job, but some believe it could use
more promotion and merchandising.
Target does many things
right, of course. Although it hates comparisons to Walmart, it stays very close to Walmart prices.
Quite wisely, we think, it doesn’t see the need to match them.
"They know they
offer a superior shopping experience, so ‘close’ can work for them," said
one competing retailer. "By meeting this strategy against Walmart,
by default they are lower than traditional supermarkets. Only limited assortment
(Aldi) is lower, but of course their big trade-off is in variety and shopping
experience."
Donald J. Stuart, partner, Cannondale Associates,
Wilton, Conn., said, "Target’s private label strategy has been innovative
and they will need to continue to pursue this path in the grocery perimeter.
The challenge is being both innovative and driving store productivity.
Often some of the most innovative private label products don’t turn. They
need products that are both distinctive and highly productive and this
will be the sweet spot to win in frozen and refrigerated."
Most private label vendors
we interviewed reported good dealings with Target, although two complained
of having invested heavily in relationships that ended abruptly with the
arrival of a new buyer. And another vendor who chose to discontinue a private
label line with Target echoed Stuart’s comments:
"They need to promote better and merchandise with movement in mind,
and not necessarily a unique assortment. They need to think more like Trader
Joe’s if they want to migrate their general merchandise strategies into food.
Otherwise, they need find a strategy that differentiates them from Walmart."
One vendor said Target
needs to invest more heavily on the food side — particularly
in perishables
— but that this may be difficult now because of tight money and the
economic downturn.
Kevin Janiga, president of Winsights Marketing, said, "My impression of Target is that they
are going through an identity crisis on the grocery side. While they are
extremely savvy fashion marketers, they have struggled to develop a brand
positioning on the grocery side that resonates with consumers.
"For example, in
the Tampa area, Target is the destination of choice for affluent, suburban
females to buy general merchandise and clothes. The GM side of our local
Target supercenter is always brimming with activity. However, the grocery
side is a ghost town. All these same affluent consumers shop Publix for
their groceries."
Discussion Questions:
What has impressed you about Target’s food assortments and what needs
to be worked on? How should Target be positioning its food assortments?
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It’s hard to put one’s finger on the exact problem, but Target just doesn’t get it on food. The store’s are clean, bright, and empty. Their prices aren’t bad or great, just so so. Their assortment is OK but not great either. Department sizes are small for a supermarket and large for a C-store, just cautiously middle of the road. Employees are friendly but seem detached and not invested in the concept.
It’s almost like this is an experiment to try to decide if they really want to get into the food business. So far it looks like they aren’t too sure.
My impression is that Target can’t compete with Walmart as an “everyday” food shopping destination. It doesn’t have the right mix of supercenters as part of its total store portfolio in order to offer dominant assortments. And because Target tries to be true to its brand image, a lot of its food offerings are “aspirational” private brands (Archer Farms, Choxies) without a clear-cut value positioning, even if they are actually competitive. The mix of discretionary vs. consumable product at Target goes a long way toward explaining its soft comps in 2008.
Target needs to really pull away from the cookie cutter grocery layouts. They do such a good job in apparel and electronics that they need to apply some of that innovation to food. They are not Walmart, nor do they cater to the Walmart customer. I would give it more of an upscale value flavor to it by adding unique and higher quality products. Revamping fixtures and adding more lighting will enhance the customer experience. And we can’t forget catering more to the local community. That word of mouth marketing within communities is priceless.
Target has not moved their primary marketing strategy to food. They need to tell the consumer why to buy food at Target: because it’s three days fresher, better supply chain, because Target’s buyers are the pickiest in the market, because the quality is so much better…just a few examples.
It’s food; eat it and it’s gone, unlike clothing, which people wear to show off their personal choice. The consumers are thinking that a head of lettuce is a head of lettuce. Target needs to communicate why that head of lettuce is different than others…no chemicals, extra vitamins, comes with carrots, etc.
Target’s reputation has been built on great and imaginative marketing, creative assortments, clean stores and good employees. But their food side is rather “plain vanilla” with too much emphasis on PL. There is no sense of theater even though its pricing is pretty fair. They offer shoppers a comfort experience since they aren’t too crowded and their dynamics are too low and not stimulating.
What to do? Build in a little showmanship, some excitement, animation, some uniqueness beyond Archer Farm items, more meat department oomph–and add some Broadway theater into the food side.
I see Target’s grocery offering literally every week as a shopper. When I first started buying groceries from them, I found that their assortment was a bit bland–things that I would have found on my local grocer’s shelf as more specialty items were not available at Target. However, I’ve found that the Archer Farms brand fills in for a lot of those specialty items. I agree with the produce comments–that assortment is very basic. Apples, bananas, and oranges and that about sums it up. There isn’t any Archer Farms product to fill that in.
But there are two reasons why I literally drive past 3 Krogers and a Safeway to get there–one, we never have to stand in line, and two, no matter how I slice it, my grocery bill is 25% less at Target than at any other grocery store. As an added bonus, the aisles are never crowded with promo displays or floor graphics or shelf talkers screaming out at me, and I kill two trips in one, because I almost always have to go someplace for a birthday present or to pick up something from the GM aisles for school or home.
So as a shopper, I find I put up with a lot of dissatisfaction on the assortment before I break down and head to the Kroger less than a mile away. But Target’s issues in getting new customers are real: these advantages are all subtle, things you come to appreciate after trying it for a couple of weeks. If you just walked the aisle to see if they have what you like at the prices you want, you could easily walk away thinking the assortment is not great and the prices are not low enough to make up the difference.
I agree with many of the above comments. Target is very competitively priced on the grocery items but they just are not getting credit for it from the consumer. It can take a lot to take a busy consumer and get them to move away from their normal grocery store. We know they have what we want and we know where to find it, however, if we give the Super Target stores a fair chance–say 3-4 weeks–we then notice the prices, the cleanliness, and we may develop a new habit. OK–so we may have to run to the neighboorhood Publix, Kroger or Jewel once in awhile to fill in on the things Target doesn’t have…we can live with that for the much lower prices and yet a cleaner, neater, and more in-stock store than Walmart.
Target needs to work with direct mail or something to get those shoppers in the stores and develop that habit. When the store opened by me, they sent a grocery flier out one time…that just cannot compete with those weekly ads from the regular grocers to get me to change my shopping habits.
Target’s Archer Farms needs radical expansion. Then they’ll be more like Trader Joe’s: special assortments with maximized margins. Or acquire Stew Leonard’s and roll it out to every Target location.
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It’s hard to put one’s finger on the exact problem, but Target just doesn’t get it on food. The store’s are clean, bright, and empty. Their prices aren’t bad or great, just so so. Their assortment is OK but not great either. Department sizes are small for a supermarket and large for a C-store, just cautiously middle of the road. Employees are friendly but seem detached and not invested in the concept.
It’s almost like this is an experiment to try to decide if they really want to get into the food business. So far it looks like they aren’t too sure.
My impression is that Target can’t compete with Walmart as an “everyday” food shopping destination. It doesn’t have the right mix of supercenters as part of its total store portfolio in order to offer dominant assortments. And because Target tries to be true to its brand image, a lot of its food offerings are “aspirational” private brands (Archer Farms, Choxies) without a clear-cut value positioning, even if they are actually competitive. The mix of discretionary vs. consumable product at Target goes a long way toward explaining its soft comps in 2008.
Target needs to really pull away from the cookie cutter grocery layouts. They do such a good job in apparel and electronics that they need to apply some of that innovation to food. They are not Walmart, nor do they cater to the Walmart customer. I would give it more of an upscale value flavor to it by adding unique and higher quality products. Revamping fixtures and adding more lighting will enhance the customer experience. And we can’t forget catering more to the local community. That word of mouth marketing within communities is priceless.
Target has not moved their primary marketing strategy to food. They need to tell the consumer why to buy food at Target: because it’s three days fresher, better supply chain, because Target’s buyers are the pickiest in the market, because the quality is so much better…just a few examples.
It’s food; eat it and it’s gone, unlike clothing, which people wear to show off their personal choice. The consumers are thinking that a head of lettuce is a head of lettuce. Target needs to communicate why that head of lettuce is different than others…no chemicals, extra vitamins, comes with carrots, etc.
Target’s reputation has been built on great and imaginative marketing, creative assortments, clean stores and good employees. But their food side is rather “plain vanilla” with too much emphasis on PL. There is no sense of theater even though its pricing is pretty fair. They offer shoppers a comfort experience since they aren’t too crowded and their dynamics are too low and not stimulating.
What to do? Build in a little showmanship, some excitement, animation, some uniqueness beyond Archer Farm items, more meat department oomph–and add some Broadway theater into the food side.
I see Target’s grocery offering literally every week as a shopper. When I first started buying groceries from them, I found that their assortment was a bit bland–things that I would have found on my local grocer’s shelf as more specialty items were not available at Target. However, I’ve found that the Archer Farms brand fills in for a lot of those specialty items. I agree with the produce comments–that assortment is very basic. Apples, bananas, and oranges and that about sums it up. There isn’t any Archer Farms product to fill that in.
But there are two reasons why I literally drive past 3 Krogers and a Safeway to get there–one, we never have to stand in line, and two, no matter how I slice it, my grocery bill is 25% less at Target than at any other grocery store. As an added bonus, the aisles are never crowded with promo displays or floor graphics or shelf talkers screaming out at me, and I kill two trips in one, because I almost always have to go someplace for a birthday present or to pick up something from the GM aisles for school or home.
So as a shopper, I find I put up with a lot of dissatisfaction on the assortment before I break down and head to the Kroger less than a mile away. But Target’s issues in getting new customers are real: these advantages are all subtle, things you come to appreciate after trying it for a couple of weeks. If you just walked the aisle to see if they have what you like at the prices you want, you could easily walk away thinking the assortment is not great and the prices are not low enough to make up the difference.
I agree with many of the above comments. Target is very competitively priced on the grocery items but they just are not getting credit for it from the consumer. It can take a lot to take a busy consumer and get them to move away from their normal grocery store. We know they have what we want and we know where to find it, however, if we give the Super Target stores a fair chance–say 3-4 weeks–we then notice the prices, the cleanliness, and we may develop a new habit. OK–so we may have to run to the neighboorhood Publix, Kroger or Jewel once in awhile to fill in on the things Target doesn’t have…we can live with that for the much lower prices and yet a cleaner, neater, and more in-stock store than Walmart.
Target needs to work with direct mail or something to get those shoppers in the stores and develop that habit. When the store opened by me, they sent a grocery flier out one time…that just cannot compete with those weekly ads from the regular grocers to get me to change my shopping habits.
Target’s Archer Farms needs radical expansion. Then they’ll be more like Trader Joe’s: special assortments with maximized margins. Or acquire Stew Leonard’s and roll it out to every Target location.