Target settles on a 'Market' it likes

Discount Store News, April 1, 1997

MINNEAPOLIS -- Target is in "The Market" for food.

After 30 years of swearing off foodstuffs in its store Target is continuing with its supercenter test and expanding the likes of its three-store pantry-like program called The Market. Ten more sites, reportedly in the Columbus, Ohio, and Denver markets, are coming on line row to further Target's experiment with convenience food items. The first three stores in the test, Rockford, Ill., Janesville, Wis., and Des Moines, Iowa, have been opened nearly a year.

The new stores, according to one vendor, will be different from the first three as Target searches for the winning formula in food. The vendor, who asked not to be identified, said The Market locations will feature much less refrigerator and freezer space than the first three and a slightly different format. Details were not yet available.

The planning for Target's Market is being handled internally. The retailer is not consulting with its food distributor SuperValu

for assistance in this program, nor is it seeking the advice of its food vendors, the manufacturer said.

Target's program, unlike that of Kmart, focuses entirely on food. The department does not include paper products and related household goods the way Kmart's does, although The Market will be located close to home-related departments or H&BC.

Milk, bread, eggs and ice cream will remain the leading food products, according to sources. Pizza is expected to be a big seller, too.

Target reportedly is going smaller with its 10 new stores. Rockford has the largest Market layout, with 96 ft. of groceries over six aisles. plus 28 ft. of both cooler and freezer space located adjacent to the snack department. The Rockford format probably will not be duplicated in the coming units. Janesville and Des Moines are smaller, with Des Moines dedicating four to five aisles for dry grocery, 16 ft. for refrigerated product and 24 ft. for frozen goods. Janesville, which has the smallest Market layout, is probably the closest to Target's adjusted Market program. It offers just two to three aisles of dry grocery and 12 ft. for both cooler and freezer goods.

The overall assortment of foodstuffs at Target's Market includes familiar snack items such as soda, juice, cookies, chips, cereal, coffee, luncheon meats and TV dinners.

"The Market and [Kmart's] Pantry test are very, very significant because Kmart and Target are trying to come to grips with the fact that they're only getting 14 to 15 trips per year from their customers compared to Wal-Mart's 26. There is a tremendous inequality in competition," said George Rosenbaum, president of Leo J. Shapiro & Associates, Chicago. Wal-Mart's supercenters get 33 trips per year from customers. The Market provides Target with an opportunity to increase the number of shopping trips per customer by helping narrow the shopping frequency gap between it and Wal-Mart, Rosenbaum said.

Target is being very selective about the stores in which it tests The Market. For example, the retailer's newest store a Target Greatland in Menlo Park, N.J., did not go through the Market test. The Edison store features a traditional snack food department, heavy on soda, juice, chips and cookies. The department offered seven gondola runs of about 24 ft., or about 1,100 sq. ft.

What was different about the Menlo Park store was the absence of Target's restaurant programs, Food Avenue and Skeedaddles, its limited-menu variation. Instead, the store offered customer-familiar fare from Taco Bell Express and Pizza Hut Express, both PepsiCo companies. The Taco Bell program had seating for 52 people, instead of the usual 72, to make room for Target's One Hour Photo Lab, another new program.

Franchise food operations are cropping up in more Targets as the retailer seeks greater financial returns from the space. A recent store opening in Madison, Wis., also featured a fast food presentation. That store installed a Taco Bell Food Avenue, offering 80% of the restaurant's usual menu. Negotiations are continuing on a second restaurant at that location, according to the Wisconsin State Journal.

Speculation in the industry is that Target is negotiating with Kentucky Fried Chicken, another PepsiCo company which is particularly popular with American families.