Tuesday, January 4, 2011

Target's Grocery Format is Gearing Up For Growth

A couple weeks ago The New York Times published an article called "Shopping at Target? Now You Can Pick Up a Dozen Eggs." The focus of the story was on Target's advertising, but it revealed much more than who their ad agencies were and how much ad money they spent.

The story mentioned Target's marketing campaign (direct mail, billboards, TV, radio, vehicle wraps) and its "full-scale campaign in more than 30 Target stores in the Philadelphia area in fall 2009," which included branded bicycles handing out produce in city streets. Did we miss that, Philadelphia?

It also points out that 350 of the 1,752 Target stores nationwide have been reformatted to include their new food layout, and they expect to reformat additional stores at a rate of 400 per year. Based on the Target website, about 35-40 of the 350 stores with a Fresh Grocery are in the Greater Philly market.

Here in Foodadelphia, there has been plenty of talk about the new players in the overcrowded supermarket field, with Walmart dominating the conversation. I'm not sure if it's accurate to say Target has been quietly entering the fray (see "full-scale campaign..."), but they sure haven't been getting the press that Walmart and Wegmans have... or for that matter, Bottom Dollar.

Yesterday a member of the GLG (Gerson Lehrman Group) Consumer Goods & Services Councils published an analysis of The New York Times story. The analysis concluded that Target's new P-Fresh format "poses a significant long term threat to conventional supermarkets across the country." Whereas Target used to view their food offerings solely as a way to keep customers in stores for a longer period of time, they are now ready to view themselves as a major competitor  in the traditional grocery market.

Furthermore, the analysis concludes that Target's biggest threat to traditional supermarkets is the strength of its brand, combined with consumers' desire to reduce the number of shopping trips they take. Here's the equation:

Moms doing the bulk of the grocery shopping + Moms love shopping at Target = Moms spending more time at Target and less time at Acme.

2 comments:

  1. Merely Innovation on Target's part. But David: how should a traditional grocer respond to Tar-j Boutique's (as we call them here in Minnesota) unfriendly overtures?

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  2. That's the big question. ShopRite does it with low prices and customer service. Giant does it with low prices and customer service. Price Chopper (uptate NY) does it with low prices and customer service. Seems to be a pattern...

    Acme, Pathmark, Super Fresh and Genuardi's can't compete due to overbearing operating expenses.

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