Target focused on the fundamentals of fresh

by Keith Nunes
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Target fresh grocery department
Target is focusing on fresh produce.

MINNEAPOLIS — Target Corp. is focused on getting its food business in balance with opportunities for growth, said Brian Cornell, chairman and chief executive officer.

Brian Cornell, Target
Brian Cornell, chairman and c.e.o. of Target

“We’ve done deep dives into the business and we’ve been tearing down every category and every process,” he said March 2 during a meeting with financial analysts. “What we quickly realized, the deeper we dug, the more fundamental challenges we found.

“Looking across categories, we found out our market share was out of balance. We were strongest in the categories with the least growth potential. Too much of our assortment is in the center of the store while the true growth opportunities exist around the perimeter. We found we were touching product far too often, driving up operational costs and complicating our out-of-stock position.”

In 2016, the company will continue to focus on showcasing more organic products and improving the freshness of each store’s product assortment.

“We are moving through the assortment item by item, starting in the fields and carrying it all the way to the sales floor,” Mr. Cornell said. “We are also focused on driving penetration with our own brands, including the newly relaunched Market Pantry. And we brought in a lot of external talent. They are also laser-focused on business basics. They are focused on assortment and pricing and promotion and presentation and they’ve zeroed in on those key seasonal moments when we absolutely need to shine.”

He added that initial efforts appear to be reaping dividends as the company’s comps in grocery have outpaced the rest of the store in both the third and the fourth quarter of 2015.

Target organic products - Simply Balanced organic chips, Clif organic bars
In 2016, Target will continue to focus on showcasing more organic products.

“It’s a big turnaround after lagging our overall performance for several years,” he said. “We know grocery is highly complex, but it’s also very important to our guests and there’s a ton of work going on right now behind the scenes that you will never see, but we look at each and every day.”

But the current focus on fresh produce should not be read as an indicator the company is going to expand its fresh food offerings into such categories as meat or seafood, Mr. Cornell said.

“We want to make sure that, in food, we are focused on getting the fundamentals right,” he said. “We think we can differentiate through assortment. We’ve also got to be clear about who we are and who we are not and we are going to be true to the drivers of our strategy and how we differentiate the brand.

“So we are going to make sure that we have got the right fundamentals in place in food. We clearly recognize we have to improve freshness whether that’s in a Super Target or a PFresh, but we are going to be really careful about moving into new spaces that add greater complexity to the business model.”

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