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<\/p>\nLast week\u2019s release of Target\u2019s second quarter earnings report and the subsequent conference call shined a light on the company\u2019s ongoing dilemma in the grocery segment, and it\u2019s not clear that Target will have the answers in the near term.<\/p>\n
First, the headlines. Overall comp sales at Target were down 1.1% for the quarter and flat for the first six months of FY2016, which is obviously not great. Of particular concern for Target and interest for the grocery-minded observer was the 2.2% drop in foot traffic \u2013 a metric that a successful grocery business bolsters. In his comments, CEO Brian Cornell clearly spoke to this issue – \u201cIn the second quarter, our number one challenge was traffic.\u201d<\/p>\n
Reflecting overall comp sales and adding to the deficit, grocery comps were down in the second quarter, following a first quarter in which executives described grocery sales as \u201cslightly down\u201d within an overall 1.2% comp sales increase for the quarter. Blame for the first quarter sales dip was assigned to disruption caused by a large-scale grocery reset in April that brought 1,000 new items and 55 new brands to Target shelves, many with the requisite better-for-you credentials retailers feel compelled to tout in such instances. It was, though, this reset that was expected (and failed) to bolster sales in the second quarter.<\/p>\n
For Target, though, the challenge goes beyond the results of a quarter or two. In the past executives have admitted that consumers don\u2019t view Target as a destination for groceries. The dilemma lies in the fundamental question of how to execute the company\u2019s \u201cExpect More, Pay Less\u201d vision within the grocery segment.<\/p>\n
On the \u201cexpect more\u201d side of the equation, Target has yet to demonstrate it can or wants to compete against specialty grocers in terms of product offerings and quality. In terms of \u201cpay less,\u201d it simply can\u2019t compete with Walmart. In the grocery segment, the elements of Target\u2019s two-part vision seem to be irreconcilable opposites. The company is stuck squarely in the middle between the two ideas, which in terms of consumer appeal translates as \u201cnowhere,\u201d not a good place to be for the company\u2019s second-largest segment by sales (behind household essentials).<\/p>\n
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The grocery segment accounts for 21% of Target Corp. sales on an annual basis. Apparel and accessories account for 19%. Yet much of the time, Target\u2019s marketing efforts seem to take the former as an unexciting given only to spend time on the fashionable and fun latter. To change consumer perception, Target will not only need to figure out how to get the \u201cExpect More, Pay Less\u201d mix right in the grocery aisles but also how to become a go-to destination for chicken leg quarters and Mossimo \u2013 at the same time.<\/p>\n","protected":false},"excerpt":{"rendered":"
Last week\u2019s release of Target\u2019s second quarter earnings report and the subsequent conference call shined a light on the company\u2019s ongoing dilemma in the grocery segment, and it\u2019s not clear that Target will have the answers in the near term. First, the headlines. Overall comp sales at Target were down 1.1% for the quarter and… Continue reading Target Struggles \u2013 in Grocery and Elsewhere<\/span><\/a><\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"post-template-no-sidebar.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[16],"tags":[17],"class_list":["post-7584","post","type-post","status-publish","format-standard","hentry","category-grocery-convenience","tag-csg-exclusive","entry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts\/7584","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/comments?post=7584"}],"version-history":[{"count":0,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts\/7584\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/media?parent=7584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/categories?post=7584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/tags?post=7584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}