Amid all of the moving parts at Target Corp., one of the biggest question marks is an upcoming food makeover.
The overhaul aims to make Target’s grocery department into more of a destination instead of an afterthought. But it’s already taking longer than expected to figure out.
When executives unveiled a strategic road map in March, they set an ambitious timeline for the food overhaul, telling analysts they would roll out the most substantial changes in 2016.
Now, Target officials say they need more time to hash out and test ideas – 2017 is the new rollout time.
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“We want to get it right,” Target spokeswoman Katie Boylan said. “It’s less about how fast we go and more about making sure we implement the right kind of changes. We’re trying to be really judicious in our approach.”
Some of the questions on many analysts’ minds: How serious is Target in investing to improve its fresh produce? How far will it go in becoming a specialty grocer that focuses in organic, gluten-free and other artisanal products? And how radically different will the department look and feel?
“Everyone has the question: What the heck are they doing?” Amy Koo, an analyst with Kantar Retail, said at a recent workshop in Minneapolis. “We know they are experimenting … But I’m pretty sure their plans have not gelled yet.”
She added that if the eventual changes drive drive more trips to stores, it would be a huge success. Target executives have said that if a revamped grocery department could help drive each shopper to make one more visit to a Target store every three months, it would translate to $2.5 billion in additional sales a year.
To help guide the long-term plan, Target has been rolling out a series of small tests in select stores across the country, including a SuperTarget in suburban Minneapolis, which is finishing a $10 million remodeling.
When shoppers now enter that store, they see a new kiosk on wheels – reminiscent of a kitchen cart one might find at Williams-Sonoma – that displays boxes of multicolored pasta, jars of premium marina sauce, bottles of white truffle oil, white bowls and sleek place mats, colanders and cooking utensils. Other carts offer meal or party ideas with both ingredients and related cooking tools.
“It is to spur ideas and inspire our guests,” Target’s Boylan said. “It’s all around thinking about food as an occasion and less as a transaction.”
The suburban store now has whimsical phrases such as “snack happy” and “ok to crave” above displays of better-for-you snacks. Other new signs say “livin' local,” “we dig organic,” and “no regrets.”
It’s also one of 450 Target stores across the chain with a bigger assortment of gluten-free, organic, and healthier items.
Naughton and his colleagues have tracked a 49 percent increase in the number of organic items at Target in the last year. Many of those have been from Target’s private brands, which helps keeps the costs down for what can otherwise be pricey items, he said. But he added that he’s found that Target often sells even brand-name organic items for a cheaper price than Whole Foods when comparing the exact same items.
One of the reasons Target can afford to do that, he said, is that the retailer gets good margins on its home goods and apparel.
“It allows them to be competitive on traffic-driving categories like food,” he said. “It’s a nice advantage they have compared to others.”