Target Rethinks Food as Perishables Test in Minneapolis Discount Stores

Target may have gone light on supercenters in its latest round of store openings, but it is pressing another big food initiative, testing a recently announced perishable food expansion in discount stores at two locations, one in Minneapolis and the other in the city’s suburb of Ridgedale.

The expanded perishables test is ongoing, said Target spokesperson Delia McClinden, and a roll out date has not yet been established.

In the company’s last conference call, Gregg Steinhafel, chairman and CEO, announced that Target would begin introducing meat, produce and bakery products in its discount stores to get customers to visit them more regularly.

Of the 27 new locations Target plans to unveil Sunday in the first of its three annual store opening rounds, only six are supercenters, which is below the approximately 30 percent level that the company has aimed for over the past few years. All six, located in Hillside, Ill., Canton, Ga., Kissimmee, Fla., and Pflugerville, Allen and Lewisville, Texas, are in regions where Target already operates multiple supercenters, so none represent new market expansion.

McClinden said the number of supercenters in the current crop of openings was basically determined by local demographics and real estate opportunities Target had to consider and whether they suggested the communities would favor a supercenter or discount store. She said the decision didn’t rest on any new store opening doctrine. And, in fairness, the 30 percent proportion of supercenters to total store openings was always an approximate guideline.

Still, don’t be surprised if Target does cut down on supercenter openings for a while, or if it limits them to markets where the store format already operates. As Wal-Mart did previous to opening supercenters in Canada, Target may choose to expand the food offering at discount stores and let consumers get familiar with it before pushing supercenters into new markets. The strategy has served Wal-Mart. Heck, it served it so well in Canada that the retailer discovered that its Sam’s Clubs there were redundant.

The expansion of perishables in discount stores – and this would represent Target’s third major discount store food expansion in the past half decade — could help acclimatize consumers to the retailer’s new roll as full-line grocery store, and it would allow for distribution to ramped up gradually. Taking a cautious approach to enhancing the edibles supply chain is advantageous, as mistakes with perishables can mean big money lost to spoilage or sick customers, and wouldn’t that just ruin Target’s latest food initiative.