Wednesday, May 13, 2009

Target Mirrors Wal-Mart, Recession Relief in the Grocery Aisle

According to the Wall Street Journal, Target is set to add more mini-groceries to its stores in an effort to compete with Wal-Mart during the economic downturn. Known for skewing up market, the Minneapolis based retailer now needs to compete with many upwardly mobile shoppers who find themselves heading to Wal-Mart to save money.

According to the article, Target has tried to emphasize food previously. In 1995, it opened the first of 245 SuperTargets, which include a full array of groceries. But it has been reluctant to rapidly add to those 175,000-square-foot stores, unable to find enough profitable locations. Its sales last year of groceries, including pharmacy and beauty products, accounted for 37% of revenue compared with 59% of Wal-Mart's U.S. department-store sales.

The new minigroceries inside existing discount department stores have increased food sales 50% at test stores, and lifted sales of other items as well, Mr. Steinhafel said during a tour of a Target store in Sun Prairie, Wis., late last month. The grocery section there sported signs proclaiming, "Eat Well. Pay Less." in a nod to its "Expect More. Pay Less." marketing slogan.

Will there be an upswing in profits as Target expands their grocery offerings? We'd like to hear your thoughts.

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