Target plans to offer fresh meat, dairy in more stores

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Target Corp. said it’s benefitting from a recent expansion into fresh food sales and plans to offer meat, fruits, vegetables and dairy products in even more stores over the next three years.

The Minneapolis-based retailer expects to add “PFresh” food departments to a “substantial portion” of its stores by 2012, Target spokeswoman Jenna Reck said June 17.

Target, which operates 1,740 stores in 49 states, opened its first PFresh food departments in 2008. The company added PFresh to 108 stores last year and plans to add another 350 this year, Target said previously.

General merchandise retailers such as Target and Wal-Mart Stores, Inc., are growing markets for beef, pork and dairy producers. Target and Wal-Mart, aiming to capitalize on consumer trends toward “one-stop shopping” venues, have expanded fresh food selections in recent years and gained share on traditional supermarkets.

Wal-Mart is the largest U.S. food retailer, with about a fifth of the overall market, according to analysts.

While traditional Target stores carry no perishable items, the PFresh stores sell fresh produce, steaks, milk and other foods.

It’s debatable, however, whether general merchandises can execute a fresh food game plan as effectively as the supermarkets, retail consultant Jeremy Diamond said.

Diamond, who runs the Diamond Group, a Baltimore-based firm, says he’s skeptical how effective Target will be as a volume merchandiser of fresh produce, meat and dairy products.

“When you sell so much volume, the quality tends to not be as good” compared with smaller retailers or traditional supermarkets, Diamond said. “I’m very leery of that. I don’t know if they’re going to keep control over quality, given that much volume.”

Additionally, the fresh meat selection in some Target stores appears to be smaller than what’s available at supermarkets.

A Target in Cicero, Ill., near Chicago’s west side, was selling nine different beef cuts and no pork, a store employee reached by phone said today. The Cicero store had T-bone steaks at $5.79 a pound and rib eye steaks at $5.19 a pound.

By comparison, a Jewel-Osco supermarket in nearby Burbank, Ill., offered “at least several dozen” choice-grade or better beef and pork cuts, a store manager said. The Jewel-Osco store sold porterhouse steaks for $5.99 a pound and pork chops for $3.29 a pound.

Reck, the Target spokeswoman, said the company has seen “strong results and incredible guest feedback” from its PFresh departments.

At Target’s annual shareholders’ meeting June 9, chief executive officer Gregg Steinhafel said adding fresh food has brought benefits, and offered an upbeat outlook for the retailer.

Target expects to open 13 new stores during the second and third quarter. Those openings will be the low point in the company’s expansion efforts, Steinhafel said, adding that Target will step up new store openings in 2011.

Still, Steinhafel has expressed caution over the U.S. economy. Target’s May comparable store sales were “somewhat below our expectations,” Steinhafel said in a June 3 news release.

“Our recent experience reinforces our belief that we will continue to experience volatility in the pace of economic recovery,” Steinhafel said in the release.

Target’s comparable store sales — reflecting stores open at least a year, a key measure of retailer performance — rose 1.3% during the four weeks ended May 29. Total sales rose 3.7% to $4.62

 

 



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