Target has two main goals for its near future: appeal to Millennial customers instead of just their parents and distinguish itself from its familiar competitor Walmart. Fortunately for the company, it believes it can achieve both those outcomes simultaneously by improving its grocery offerings.

When Target first started introducing grocery offerings to its stores, it prompted a temporary bump in sales. That bump did not persist though, leading today’s executives to seek a path to persistent growth. Noting survey data that indicate that younger consumers are less interested in or compelled by packaged food, Target plans to add more organic, gluten-free, and natural options.

In addition, it found that only 18 percent of shoppers agreed that Target’s food offerings met their preferences. To revise those perceptions, Target is focusing on seven uniquely defined categories of grocery items: granola/yogurt, tea/coffee, candy, snacks, fresh meat, beer/wine, and produce. Although Target does not necessarily plan to give these categories more shelf space, they will be the focus of promotional efforts and merchandising tactics.

In making these changes, Target acknowledges that its inspiration is coming more from innovative grocery retailers such as Trader Joe’s and Wegmans rather than its traditional nemesis Walmart. Rather than a warehouse feel, Target wants to “freshen” its overall image and store surroundings.

Beyond these assortment approaches, Target has announced plans to expand its digital reach, open more small footprint stores, and encourage greater localization in store assortments. For consumer packaged goods manufacturers that have grown accustomed to stocking their packaged foods in Target stores across the nation, these changes might come as an unpleasant shift.

Discussion Questions

1. How is Target adjusting its assortment to appeal to Millennials?
2. Based on these changes, if there were a Target near you, would you shop there?

 

Source: Paul Ziobro, The Wall Street Journal, March 3, 2015