Target announced that it plans to shift away from promotional pricing and back to every day low pricing as part of a $1 billion investment this year. The change in pricing is part of the company's overall strategy to enhance the in-store experience and leverage its stores as fulfillment centers for online orders.
CEO Brian Cornell said the investments in pricing will be spread throughout the store, but will begin with food, personal care and household essentials, "the trip-driving items our guests depend on every day," he said.
Target has been testing its food offerings at prototype stores in California and Texas, including transitions to daily delivery of produce.
In addition to Target's price investments, the company plans to remodel stores and open about 100 small-format stores in the next three years. The TargetExpress banner will be found mostly in urban markets, densely populated suburbs and college campuses. Currently there are 32 TargetExpress stores, all of which are highly tailored to suit the needs of the individual neighborhoods, the company said.
According to a story in Supermarket News, the small-format stores are part of Target's e-commerce strategy. Company executives reported that physical stores played a key role in fulfillment during the past holiday season, with 80% of online orders being picked up at stores.
These changes come in the wake of a sharp decline in profit in 2016. Net income fell 18.6% for the year, with sales down 5.8% to $69.5 billion.