Food business a factor in Target's growth
May 24, 2007
by Keith Nunes
MINNEAPOLIS — Food is playing a larger role in driving repeat customer visits for Target Corp., said Gregg Steinhafel, company president. The introduction of food brands such as Market Pantry, Archer Farms, Choxie and Sutton & Dodge have expanded the company’s efforts and made food a central part of the chain’s growth strategy.
In a conference call with financial analysts Mr. Steinhafel outlined the company’s efforts to grow its activity in the fresh and packaged food markets.
"We continue to expand our food offering and general merchandise stores with up to 34 sides of food in our new and remodeled stores," he said in the May 23 conference call. "We are rolling out to more than 400 stores throughout the chain an expanded assortment of authentic Hispanic food and we continue to improve our guest shopping experience at Super Target with our expansion of self-service delis, broader assortments of organic and natural foods and locally grown produce and greater availability of prepackaged produce to enhance both food safety and check-out speed."
Bob Ulrich, chairman and chief executive officer, added, "We're working hard to develop more frequent visits by our guests and food is an important part of that strategy, plus we have right sized our stores and plus our new stores and remodels have a larger concentration of food as grocery becomes more important not just at Super Target but across the chain, so this is an anticipated mix change."
In response to an analyst’s question, Mr. Steinhafel said the company’s food efforts are growing at a faster rate than its home or apparel lines, but cost inflation remains an issue for Target.
"The inflation as it relates to the general merchandise business is primarily concentrated in the food categories right now and to a lesser extent some of the resin-based products or commodity products like paper, but we've seen some fairly aggressive increases in food, whether it’s citrus products or related to corn and wheat-based products that is having a pretty meaningful effect," Mr. Steinhafel said.