Dive Brief:

• Target has resumed rolling out a program that adds fresh and frozen groceries as well as alcohol to its Drive Up curbside pickup program, the company announced during its earnings call Wednesday. The pilot program launched in early March but was paused later that month so the company could focus on its pandemic response.
• The service is now running again in the Twin Cities market and recently expanded to Kansas City, Target Executive Vice President and Chief Operating Officer John Mulligan said. “Operational results have been positive so far,” he said. “And while we will continue to govern the pace of the rollout based on the circumstances facing our team, we are committed to rolling out this capability to as many stores as possible this year.”
• Target offers Drive Up at nearly all of its 1,850 stores and saw significant sales growth through the program during Q1, when 40% of customers who used the service were new to the company.

Dive Insight:

The pandemic may have sidetracked Target’s grocery pickup rollout, but not for long. As consumers increasingly turn to curbside pickup for grocery orders, the company doesn’t want to miss out on sales and the opportunity to nab even more new customers.

During its investors’ day presentation earlier this year, Target executives discussed the importance of same-day fulfillment as a way to acquire new shoppers and boost ticket sizes. Following a shoppers’ first pickup trip, the company said overall spending goes up nearly 25%.  

"Today, Target can put a gallon of milk in your fridge but not in your trunk," Target CEO Brian Cornell said at the time. "In 2020, that's going to change.”  

Same-day grocery pickup has become even more important as millions of shoppers have shifted more of their purchases of milk, eggs, frozen meals and cases of beer online. Kroger has eliminated fees for its store pickup program and is filling up slots as quickly as it can add them. Walmart has added more pickup slots while Sprouts Farmers Market recently fast-tracked its pickup program to allow ordering chain-wide.

Target’s grocery pickup pilot coincides with a greater focus on food and beverages for the company. Last year it launched Good & Gather, a grocery private label that’s set to have 2,000 different products on shelves by the end of this year, and recently partnered with Boar’s Head to offer pre-cut meats, cheeses and prepared foods at a few hundred stores.

Experts say the focus on grocery is long overdue for Target, and it’s vital now given consumers’ focus on essentials spending. Case in point: The company’s food and beverage comp sales grew more than 20% in Q1 this year while comp sales in apparel, a legacy category for Target, declined more than 20%.

Target’s main outlet for online groceries is through Shipt, its same-day home delivery service that now operates from all company stores. The service has doubled its roster to more than 200,000 contract shoppers since March, and its Q1 sales through Target increased 300%.