Target Corp. said it plans to step up expansion into fresh produce and other groceries, with plans to add “PFresh” food departments to about half of its U.S. stores by the end of next year.

The Minneapolis-based discount chain expects to have PFresh departments in about 850 stores by the end of 2011, Target’s chief financial officer, Douglas Scovanner, said during a Sept. 24 meeting with reporters at the company’s headquarters, according to Reuters.

In August, Target said it had PFresh at over 300 U.S. locations after remodeling more than 200 stores so far this year. While traditional Target locations carry no perishable items, the PFresh stores sell fresh produce, including bananas, seasonal fruit, berries, bagged salads and baby carrots.

Target, which launched the PFresh format in 2008, operates about 1,743 U.S. stores.

General merchandisers such as Target and Wal-Mart Stores, Inc., have scaled up fresh food departments in recent years and gained market share on traditional supermarkets.

Target’s PFresh expansion, partly aimed at increasing holiday sales, will boost the store’s fruit and vegetable offerings as well as packaged foods. PFresh is expected to add 1 to 2 percentage points to Target’s 2011 same-store sales, Scovanner said Sept. 24.

In the three months ended July 31, Target’s comparable-store sales rose 1.7% compared with the same quarter in 2009. Comparable-store sales, a widely-followed measure of retailer performance, reflect stores open at least a year.

Target also plans to open its first small-format urban store in 2012 in Seattle, with other locations being considered from New York to Miami, Boston and Chicago, the company said Sept. 24.

Target plans to step up PFresh expansion