Target Luring Customers to Discount Stores with Meat, Produce, Bakery

Target plans to add meat, produce and bakery items at its discount stores in an expansion of food and commodity products designed to get customers onto its sales floors more often.

In a year-end conference call this morning, chairman and CEO Gregg Steinhafel said Target had seen a "fundamental change in consumer spending patterns." The company is concerned that consumers, even after the recession ends, can't be coaxed back to stores by style alone.

Certainly, expanding the assortment of perishable food at discount stores, which already includes deli and dairy items, will take time and be expensive, and not only as regards actually installing product and the coolers that display it. Consumers often are reluctant to change where they shop for perishable food once they have confidence in a particular store's freshness and quality.

So if the meat, produce, bakery troika represent a long-term adaptation to changing consumer behavior, Target will deal with the immediate issue of consumer wariness in the recession by expanding the existing assortment of products consumers shop regularly, including health-related items, commodities such as paper towels and laundry soap, groceries and existing perishables. The company is devoting more shelf space to those categories in the hope of getting more frequent store visits from consumers, and it is taking it from apparel, seasonal and home.

Target also will feature its food private labels more prominently including the budget Market Pantry and Archer Farm, which was developed to compete on a quality level with national brands. Target has used Archer Farms to introduce trendy items at lower prices than gourmet brands charge for the latest taste sensations to provide cost-conscious shoppers with an alternative.

Beyond adding new products and displays, Target is upgrading information systems for food, commodities and pharmacy, Steinhafel said. It also will promote them more prominently in store circulars and advertising. In its marketing, Target will wrap commodities and food in with a message about the value it offers. One goal of that advertising is to make a case that Target's prices are close enough to Wal-Mart's that it is a viable destination for consumers who like to save money but want a different shopping experience. Getting something like the same number of food shopping visits Wal-Mart enjoys would be a great boost for Target.