Sales in the grocery industry are never easy to come by. It takes an experienced leadership team, motivated department managers, an effective supply chain and qualified employees to find those sales. That doesn't even take consumer demand, market conditions, evolving tastes and growing competition into account. Suffice it to say, running an effective grocery chain can be a daunting task.
Those details combined make it quite interesting that Target's grocery sales grew faster than it's overall sales during the last half of 2015. Despite the progress in grocery sales, overhauling the chain's grocery section is taking longer than expected. According to CEO Brian Cornell, Target's grocery mix focuses primarily on packaged and dry goods and stands to spur the most growth in fresh offerings. Cornell said,
"The deeper we dug, the more fundamental challenges we found. We know repositioning food is going to be a much bigger task than just reconfiguring that part of the store."
The company is also looking to marry it's in-store experience with the online side, creating a retail store that also serves as a distribution center. Target officials note that the company's existing supply chain is too rooted in the past for that goal, specifically on the distribution side. To that end, the company recently hired Arhur Valdez, an Amazon alum, as vice president of supply chains and logistics. Although the supply chain improvements will most likely affect non-food consumables most, any increased efficiency is likely to attract more consumers to the store.
The company also noted that its Chicagoland experiment in localized merchandise paid off, with reported sales increases in the 1% to 2% range. On the food side, the company tested grab-and-go healthy food in small packages at it's Streeterville location for urban customers who typically travel on foot or by bus. The company considered the trial a success, but many are unsure if it can be rolled out company-wide. To that end, the company is exploring another trial in Los Angeles-area stores.
Do you think Target has what it takes to lead in the grocery department?
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Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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