(UPDATED COVERAGE, Nov. 18) Target Corp.’s expansion of its food format in a handful of stores across the country appears to have been a success, and that means the retail chain’s shoppers can expect to see more food items in more stores in 2010.
Chairman, president and chief executive officer Gregg Steinhafel said Target plans to expand what it calls the “P-fresh” initiative into 350 additional general stores in 2010. Steinhafel discussed the plans Nov. 17 during Target’s third-quarter financial report.
Steinhafel said Target currently has P-fresh in 108 stores, including 30 that opened in the Philadelphia area last month.
Target, which saw a dip in sales of 2.9% in 2008, announced last spring its intentions of expanding grocery presence in up to 100 of its 1,700 stores by the end of this year. The P-fresh mini grocery stores included a minimum 50% increase in food items carried in a general Target store. Two test stores opened in the Minneapolis area in 2008, and more locations were added early this year across the country.
A full array of grocery items is included in 245 SuperTarget stores in the U.S. Sales from groceries, including pharmacy and beauty products, and accounted for 37% of revenue last year.
For the third quarter, which ended Oct. 3, net income increased 18.4% to $436 million, while retail sales rose 1.4% to $14.8 billion. For the first nine months of the year, net income fell 3.3% while retail sales dropped slightly.
The new grocery items in Target stores include basic fresh produce, fresh meats and bakery goods, along with value-added packaged meals to suit singles and families. Steinhafel said during a conference call that perishable products accounted for relatively few stock-keeping units in P-fresh departments. The majority of stock-keeping units, he said, were dry groceries, dairy and frozen products.
“Clearly, we’ve added perishables, but the perishables section is still relatively small in comparison to how deep we went in those other categories,” he said during the conference call.
Target spokeswoman Hadley Barrows said some of the most popular produce items are bananas, seasonal fruit, berries, bagged salads and baby carrots.
She said Target partners with wholesalers like Supervalu, third parties and outside vendors in procuring its produce.
Expect to see more items in more stores as long as the success continues.
“The general merchandise store with expanded food offering has been well-received by our guests,” Barrows said in an e-mail. “If we continue to experience favorable results from our test stores, we intend to incorporate this expanded food offering into a substantial portion of our chain over the next three years.”