Monday, July 7, 2014

Target's grocery business lags behind Walmart, competitors

An analyst report on Nasdaq.com last week stated that Target trails its competitors in the grocery business, and that although the company's grocery share will continue to rise, it will be at a slow pace.

According to the report, Target earns less than one-fourth of its revenues from food and consumables, and has found it hard to attract grocery customers due to competition from Walmart, "its cheaper counterpart." A recent study by Kantar Retail said that a basket of goods at Walmart was about 4% cheaper than a similar basket at Target, which relies on "specific and occasional" discounts, rather than providing everyday low prices like Walmart does.

As of early 2013, about 1,100 Target stores had a P-Fresh food section, and about 250 stores had full-line grocery items. The P-Fresh concept, introduced in 2009, includes an expanded fresh food layout located in a prominently visible location, displaying frozen and dairy products, perishable items, snacks, beverages and other grocery items.

At the start of the program in 2009, groceries contributed about 16% to Target's overall revenues, compared to 23% in 2013. The report on Nasdaq.com suggested that the company's share may increase to 24-25% over the next four or five years, but will remain significantly below Walmart's 55% share.

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