Target Will Make More Green by Weeding Out Plant Sales

For big mass merchants, offering a huge plant selection has seemed compulsory. But Target (TGT) is wisely pulling the plug on its plant departments, and plans to close all 262 of them by the end of summer.

The company said it's killing off plants because the category is "no longer profitable," a statement that hints that maybe it was profitable before, but in the downturn more customers have cut their plant purchases. But it's entirely possible the category was never a big moneymaker.

Green plants are a notoriously difficult category. Margins are slim. The product is perishable and goes out of season. Staff need special training to keep the stock alive and to sell it. Buyers with specific knowledge of plant vendors are needed to obtain the stock. It's difficult to predict plant trends and have exactly the plants customers will want. Plant departments can also take up a lot of valuable store space.

Making matters worse, only about one-fifth of Target's 1,750 stores have plant departments. So the company doesn't get the economies of scale on vendor pricing that it could if the entire chain did plants.

Over the years, every big chain from Walmart (WMT) to Safeway (SWY) groceries to Ace Hardware has gotten into green plants. Plants are everywhere now. Target dabbled in this category, but it's never become a core offering. It's unlikely many customers go to Target for the plants. So there's little to lose in killing off the category.

Clearing out the plants gives Target an opportunity in the hottest general-store department: Fresh food. Many Target plant departments will no doubt give way to new or expanded grocery departments, an area where Target is making significant inroads. It's already 16 percent of sales, and Target is so high on the category that food is on the cover of its annual report, not clothing.

While it may seem like a retreat to some, clearing out plants is a canny idea that may give Target a nice competitive advantage. Target is leaving competitors to struggle with a tough category while it makes more room for food, which is a proven retail traffic driver.

Photo via Flickr user robholland
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