Target's 'reimagined' store reinforces confidence in grocery business

Dive Brief:

Target announced it will unveil its first of many "reimagined" stores in suburban Houston this summer, according to The Shelby Report. The redesigned 124,000-square foot store will include an enhanced produce department, more grab-and-go and prepared meals, self-checkouts, a wine and beer shop and more circular aisles in the center of the store.
Employees will have mobile devices which they can use to process payments, navigate inventory and arrange for home delivery. The store will also serve as a hub for online order pickup, with a desk inside as well as dedicated parking bays where customers can collect their orders.
Target plans to update 40 more stores this year and 500 across the chain in 2018 and 2019. CEO Brian Cornell, who unveiled the store design this week at the Shoptalk conference in Las Vegas, said the company will update its design "with the goal of taking a customized approach to creating an enhanced shopping experience."

Dive Insight:

Target’s grocery business has struggled of late, but the company isn’t backing down anytime soon. With this new store model, the retailer reaffirms its commitment to the fresh categories where it has underperformed in the past.

One of Target’s biggest problems has been a lack of traffic to its produce department. To address this, the company’s new format integrates produce and grab-and-go foods and beverages in the same section. This strategy leverages the popularity of two fast-growing categories to put customers in contact with its fruits and vegetables, which also adds fresh appeal to those food and beverage offerings.

In addition to innovative merchandising, Target is betting on convenience and technology to boost grocery sales. Last year, CEO Brian Cornell noted the company had seen business erode due to an increase in fill-in trips. Rather than fight that trend, it appears Target is making those trips more profitable by focusing on prepared foods and alcohol, offering more payment options like self-checkout, and creating more ways to pick up online orders.

At 124,000 square feet, Target’s soon-to-be-remodeled store is made for browsing and big shopping trips. The company can bank on its home, apparel and beauty goods to draw customers into the store and inspire those larger trips. But the new format is also designed for the quick trips that customers are making more and more. Whether Target can effectively accommodate these very different shopping trips will be something industry observers will be watching closely.

Target is hoping some recent food-focused hires, meanwhile, will address product quality and sourcing. This includes the former president of Kroger’s Fred Meyer division, Jeff Burt, who will serve as Target’s senior vice president of grocery, fresh food and beverage.