Target to Have 'P-fresh' Fresh Food & Grocery Markets in 850 Stores By 2011 End; First Smaller Urban Store Set For Seattle in 2012

Target, the second-largest U.S. discount chain (after Walmart Stores, Inc.) hit a bulls-eye today with its "On Target," "All Target," media event, which it held at a location dear to the company's, and Minnesota Twins fans' hearts, in Minneapolis, Minnesota. Target is headquartered in the city.

The location: First up, the event was held at Target Field, the Minneapolis ballpark named after the retail chain and home to the Minnesota Twins baseball team. That's a pretty good start when it comes to branding an event. [Target Field has a high definition Web Cam, which allows you to view the ballpark. You can check it out here.]

Little details: Next, drinks and snacks at the event were from a nearby Target store or two. That's pretty good branding reinforcement.

See, "All Target," and "On Target" so far.

The bulls-eye: But most importantly, the retailer was on target - and even hit a bulls-eye because there was actual news announced (some was confirmation), along with a lot of good information offered, at the event. You can't say that about many, or even most, corporate media events.

Target's senior executive team was present today, nearly to a man and women. Presentations were given by CEO and chairman Gregg Steinhafel, CFO Doug Scovanner, John Griffith, executive vice president of property management, and a host of corporate merchandising executives, who talked in detail about merchandising and marketing plans, upcoming holiday promotions, a new advertising campaign, and more.

We're going to focus (below) on the two major announcements, and one minor, made today that most pertain to the food and grocery retailing aspects of Target's business and U.S. food and grocery retailing in general.

Target's Smaller-Format Urban Stores

Target confirmed and publicly announced today it's created a new urban prototype store format. The format ranges in size from 60,000-100,000 square-feet, with an average size of about 80,000 square-feet, according to John Griffith, Target's executive vice president of property management.

The average size of Target's discount format stores, which is the most prevalent of the chain's two current U.S. formats (the other being its combination grocery and general merchandise Super Target), ranges from 120,000-180,000 square-feet, according to Griffith. Target has about 1,500 discount stores in the U.S. and about 243 Super Target units, which are similar to a Walmart supercenter and offer a full selection of food and grocery products, along with everything Target sells in its discount stores.

Griffith said the first urban format Target store, which will be about 90,000 square-feet, will open in 2012, in Seattle, Washington. Initial plans, subject to change, are to have the smaller, urban stores in 10 U.S. cities to start. The cities include San Francisco, Los Angeles, New York, Chicago, Boston, Miami, and Baltimore. The urban format puts a premium on offering more essential types of products.

Target says it currently has about 150 full-sized discount stores located in numerous U.S. cities, including in a few big cities like Chicago and New York City, that have populations of over 100,000. Most of its stores are in suburban areas though.

That's where the smaller, urban store format comes in. The smaller stores will be used when size is limited, which is the case, for example, in most all of Manhattan, as well as in other dense urban cities like San Francisco and Seattle, and in urban places like downtown Los Angeles and many parts of Chicago, along with many other places in the U.S.

Like Walmart, which has now decided to "go smaller and go urban," in addition to being big, brawny and mostly suburban - See: July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store - Target has come around to realizing it's been missing a huge opportunity, and the added sales that come with it, by not having stores in most of America's most populated urban regions and cities. That's due largely to Target's (and Walmart's) strategy to date - instead of having multiple store sizes and formats, designed to fit various regions, it's relied on a one-store-size-fits-all approach, which has resulted in being locked out, for the most part, of these highly populated but space-limited cities. Target's Griffith said today the retailer now plans to make the store fit the site rather than making the site fit the store.

Target, like Walmart, is now hungry for those urban shoppers' dollars.

In July of this year, Target submitted a proposal to the city for its first store in San Francisco. That store, which would be a full-sized Target discount store, is planned to go into two vacant big box buildings, a former Mervyn's department (before that a Sears) store and a former Good Guys electronics store in a shopping center at Masonic Avenue and Geary Boulevard in the city's Richmond District, near the Laurel Heights neighborhood. The center is also near the University of San Francisco's main campus. Target would renovate the stores, which are next to each other, completely, creating one big store.

Target is already making plans for a second store in San Francisco. That store, which would be one of the new, smaller format stores, would be in the popular Metreon Shopping Center, in the city's South of Market neighborhood. The Metreon is a 350,000-plus square-foot, four-level combination shopping, technology and entertainment center. See here.

The smaller-format urban stores will include Target's 'P-fresh' fresh food and grocery sections, which it's been aggressively putting in its discount stores, although the mini-markets could be scaled down on a store-by-store basis from the current 10,000-12,000 square-feet size, based on the smaller stores' overall square-footage.
'P-fresh' Food & Grocery Markets in 850 Stores By 2011 End

The second bit of news Target announced today is that it will have 'P-fresh' fresh food and grocery store-within-a-store markets (pictured above) in 850 of its Target discount stores by the end of 2011. The 'P-fresh' sections average 10,000-12,000 square-feet. Troy Risch, Target's executive vice president for stores, said 'P-fresh' will be in 450 discount stores by the end of this month, which means the retailer plans to add the fresh food and grocery sections to 400 stores between October 2010 and the end of 2011.

To put that number into perspective, Target started out in mid-2009 saying it planned to test the 'P-fresh' grocery sections in about 100 stores. At the end of 2009, saying it was pleased with the initial test, the retailer said it would add the mini-fresh food and grocery markets to 350 discount stores this year. The 850 number means by the end of next year, Target will be offering shoppers the fresh food and grocery option in over half of its current 1,500 discount stores.

Target has been aggressively installing the 'P-fresh' food markets in its discount stores since first announcing its plans to do so in mid-2009. In fact, Fresh & Easy Buzz is currently working on a research project in which we are identifying all of the 'P-fresh' sections added to Target stores in California, Nevada and Arizona - the three states where Tesco has its 168 small-format (about 10,000 square-feet) Fresh & Easy Neighborhood Market fresh food and grocery stores. Thus far into our research, the numbers are dramatic.

For example, see how many 'P-fresh' markets Target has added to its discount stores in San Jose, California over the last 12-15 months. It's mentioned in this story - September 22, 2010: California Dreamin': Fresh & Easy Neighborhood Market, Whole Foods Market Combined Open a Total of Four Stores Today in California - we published on Wednesday.

What's powerful about the 'P-fresh' units for Target, compared to say what Tesco is doing with Fresh & Easy - both are small-format and have numerous similarities of format - is that Target will have 850 units, and can ultimately have 1,500 - and more as it opens new discount format stores - 'P-fresh' in-store markets by the end of next year, without having had to construct one new store building or acquire one vacant building to house the fresh food and grocery markets in.

Take California, for example. Target has 245 discount stores in the Golden State at present, plus a handful of its Super Target combination supermarket/general merchandise stores.

Tesco has 107 of its 168 Fresh & Easy stores in California.

This means Target, if it chooses to put 'P-fresh' fresh food and grocery sections in all of its California stores by the end of 2011, would have double the number of stores as Tesco's Fresh & Easy has, assuming Tesco opens 20 stores in California next year, without having had to build a single new store.

This is powerful and cost effective in food and grocery retailing. The capital costs for Target are minimal by being able to put the 'P-fresh' units into existing stores. Plus the grocery sections draw shoppers who buy the other goods sold in the stores. Even if Tesco were to open 50 Fresh & Easy stores in California in 2011, from store-count and cost-effective perspectives, Target has a huge advantage.

More Grocery, Health & Beauty and Body Care SKUs

Target also said today it's been added more health and beauty and body care items, including private brand, in its stores, something which has been evident in the stores for a few months.

Target has also been increasing its packaged food and grocery, and perishable, SKU count over the last nine months in discount stores without 'P-fresh' sections.

We will be offering an analysis piece on Target's expanded food and grocery retailing efforts - its expansion of "P-fresh," along with how it fits with the retailer's new smaller store urban plans. Stay tuned.

Related Stories:

May 11, 2009: Target on Tap to Put Mini-Grocery and Fresh Foods Markets Into 100 Target Discount Stores This Year; Many More Likely to Come in 2010

November 19, 2009: Competitor News: Target Corp. Planning to Dramatically Expand Food and Grocery Offerings in All of its U.S. Target Discount Format Stores

July 9, 2008: Southern California Market Report: Five Supermarkets; A New Fresh & Easy, Wal-Mart and Super Target Will All Compete in Hesperia Food Retailing Rodeo

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

September 23, 2010: Revisting 'marketside by Walmart': Format As We Know it On the Way Out But Some or All Of the Four Stores Could Be Converted

About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

Fresh & Easy Buzz

July 6, 2010:
Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store [Additional regions and cities mentioned in our piece.]

Others

Financial Times
September 19, 2010:
Walmart lines up sites for smaller stores

Wall Street Journal
September 19, 2010:
Wal-Mart Scouting Sites For Smaller US Stores - Report

Associated Press
September 20, 2010:
Wal-Mart to make a big push into urban markets

San Francisco Chronicle
September 21, 2010
Walmart sets sights on San Francisco

Additional Publications - click here

In the coming days, Fresh & Easy Buzz will have more to come about Walmart's smaller-format, smaller-store plans, leading up to the retailer's plans to offer more details in October at its anlaysts' meeting.

Walmart in Fresh & Easy Buzz: Suggested Reading/Linkage:

marketside by Walmart, Wal-Mart, Wal-Mart format innovation, Wal-Mart hybrid supercenters, Wal-Mart Marketside, Wal-Mart Modesto CA, Wal-Mart Supercenter, Wal-Mart's new Supercenter prototype, Walmart, marketside store brand, brand marketside, Walmart Stores Inc. Use the 'Older Posts' 'Newer Posts' links at the bottom of the linked pages for more pages.

Target on Tap to Put Mini-Grocery and Fresh Foods Markets Into 100 Target Discount Stores This Year; Many More Likely to Come in 2010

Retail Format Innovation: Target's Store-Within-A-Store Mini-Grocery and Fresh Foods Markets

Target Corp. has decided it will include its new store-within-a-store grocery and fresh foods mini-markets (pictured at top) in about 100 new and remodeled Target discount format stores this year, according to recent public statements made by CEO Gregg Steinhafel.

Target operates 1,300 of its discount format stores in the U.S., along with 245 Super Target combination food and general merchandise stores. The two are the retailer's current formats.

The big (generally 100,000 square-foot-plus) Target discount stores already sell a limited assortment of shelf-stable and perishable food, grocery and packaged goods items but don't offer fresh foods such as fresh meats or fresh produce. The addition of the mini-grocery and fresh foods markets in these stores greatly adds to the store's overall food and grocery SKU count.

The Super Target format stores average about 180,000 square-feet and include a full supermarket inside, similar to Wal-Mart's Supercenters.

Target already has opened a few of the mini-grocery and fresh foods store-within-a-store markets inside Target discount stores in the Midwestern U.S., including in Minnesota where the retailer is headquartered and in nearby Wisconsin.

The mini-grocery stores (picture a small-format grocery and fresh foods store but inside of a large Target discount store) carry a limited assortment of fresh foods, including meats, produce, dairy, deli and other perishables.

The mini-market's fresh produce is shrink-wrapped or pre-packaged.

The in-store mini-markets offer full-service checkout.

The grocery and fresh foods stores within-the-store also offer a limited assortment of shelf-stable food, grocery and other packaged goods items, featuring both national brands and Target's store brands. The limited item assortment comprises nearly 100% of the product categories offered in a typical supermarket, Target said earlier this year.

We estimate the mini-markets carry about 2,500 SKUS.

The mini-grocery stores inside the Target discount stores, such as the one pictured at the top of this story, use the tagline "Eat Well. Pay Less."

Target's strategy behind the mini-grocery and fresh foods stores inside the discount stores is to generate more frequent shopper trips to its stores. Since food and groceries are essentials, the hope is that by putting the mini-grocery and fresh foods markets inside the discount stores, Target will be able to capture additional customer dollars, along with becoming more of a destination retailer for shoppers.

Target's same-store sales are down by 2.9% over the previous year. The added focus on food and groceries by Target is aimed directly at stemming this loss in same-store sales, which is a very important criteria in retailing.

Additionally, the consumables strategy is a part of Target's larger effort to increase its focus on food and grocery merchandising across the board in the current recessionary climate in which there has been a flight of shoppers to rival Wal-Mart and other more deep-discount-oriented retailers.

Target has been and continues to add additional shelf-stable and perishable grocery items in all of its 1,300 discount format stores. But only the stores with the mini-grocery and fresh foods in-store markets will feature fresh cut meats, fresh produce and the expanded grocery selection.

In the recession consumers have cut back significantly on non-essential product purchases, which are the categories that brought much success to Target from the mid-1990's to just a couple years ago.

As a result, like so many other retailers, Target Corp. is refocusing its efforts, putting a greater merchandising and marketing emphasis on essential consumer packaged goods items, particularly food, grocery and related categories.

The mini-grocery and fresh foods markets inside the Target Discount stores are key to this strategy for the retailer because it has an established base of 1,300 discount format stores in which it can install the food markets.

Target said earlier this year that it plans to put the mini-grocery and fresh foods markets inside most all of its new discount format stores and in virtually all of those already scheduled for remodeling.

The chain also said that after this year, once it has the first 100 grocery and fresh foods mini-grocery shops open, it will then consider adding the store-within-a-store mini-markets to all of its 1,300 Target Discount stores in the U.S.

If the retailer does that, it will add a considerable amount of new grocery and fresh foods square footage to the already substantial amount of retail food and grocery square-footage in the United States.

A handful of the 100 in-store mini grocery and fresh foods markets slated for this year are expected to go into new or remodeled Target discount stores in California, Nevada and Arizona, which are the three states where Tesco operates it 120 small-format, convenience-oriented grocery and fresh foods markets. The Fresh & Easy markets are located throughout the Southern California region and in Bakersfield in California, in southern Nevada, and in the metropolitan Phoenix, Arizona region.

The Target mini-grocery and fresh foods store-within-a-store markets and Tesco's Fresh & Easy stores have much in common in fact.

For example, both formats or concepts offer a limited assortment of fresh foods and grocery items. Both offer pre-packaged fresh produce. And both operate on the concept of convenience-oriented grocery shopping.

In Fresh & Easy's case that convenience is in the form of a free-standing market located in the neighborhood. In Target's case it's the concept of locating a "small-format" grocery and fresh foods market inside its large target Discount format stores.

A major difference between the two of course is that Tesco's Fresh & Easy markets are free-standing stores, while Target's grocery and fresh foods markets are located inside a Target discount store.

Minneapolis, Minnesota-based Target Corp., which operates stores only in the United States, had 2008 sales of nearly $64 billion.

Food and groceries accounted for about 37% of that total revenue, according to the company, placing Target among the top-10 retailers of food and groceries in the U.S., based on annual gross sales in the categories.

Target Corp. if ranked as the fifth-largest overall retailer in the U.S. Wal-Mart is number one, followed by Home Depot, Kroger Co. and Costco.

[Photo Credit: Target Corp.]

Related stories from Fresh & Easy Buzz:

>November 19, 2009: Competitor News: Target Corp. Planning to Dramatically Expand Food and Grocery Offerings in All of its U.S. Target Discount Format Stores

>July 9, 2008: Southern California Market Report: Five Supermarkets; A New Fresh & Easy, Wal-Mart and Super Target Will All Compete in Hesperia Food Retailing Rodeo

[Follow Fresh & Easy Buzz around on Twitter.com at www.twitter.com/freshneasybuzz.]

Wal-Mart's Chief Merchandising Officer Reiterates CEO's Words that it's 'Keeping Tabs' On Tesco's Fresh & Easy Today at Bank of America Conference

Fresh & Easy Buzz broke a little news on Friday, September 12 when we reported in this piece, "CEO's Can Say the 'Darndest Things': Wal-Mart CEO Lee Scott Says He Has Faith Tesco Will Succeed With Fresh & Easy; It's A Small-Mart World After All, that Wal-Mart, Inc. CEO Lee Scott spoke out about Tesco's Fresh & Easy Neigborhood Market at the recent Goldman Sachs (investment bank) retail conference in New York City, saying the mega-retailer was keeping close tabs on Fresh & Easy and that he has faith Tesco will ultimately succeed in the U.S. with its small-format, convenience-oriented grocery stores.

It appears CEO Scott has taken the leash off (at least by his lead) his senior executives as far as talking about Tesco's Fresh & Easy is concerned at investment conferences. Previous corporate policy has been not to discuss Tesco's U.S. small store convenience grocery venture.

At an investment conference today sponsored by Bank of America, Wal-Mart chief merchandising officer John Fleming repeated a portion of what Lee Scott said at the Golden Sachs conference, which is that Wal-Mart is keeping a close eye on Tesco's Fresh & Easy stores in Southern California, Nevada and Arizona. The Bank of America conference was broadcast over the Internet.

"We have people in those stores (Tesco's Fresh & Easy) every day, every week," Fleming said at today's Bank of America conference. "We continue to monitor the progress that they make." [Fresh & Easy Buzz is well aware of this fact, having run into two Wal-Mart executives once in a Fresh & Easy store.]

Wal-Mart CEO Scott said essentially the same thing at the recent Goldman Sachs retail conference less than two weeks ago.

Is anybody else seeing the beginning of a coordinated Wal-Mart message just weeks before it opens the first four of its Marketside small-format, convenience-oriented combination basic grocery and fresh foods grocery markets in Mesa, Gilbert, Chandler and Tempe, four cities where Tesco has existing Fresh & Easy stores in the Phoenix, Arizona Metropolitan region? The four Marketside stores are located within 1 -to- 2 miles from Fresh & Easy stores in all four cities.

Wal-Mart's John Fleming also made some new news at today's Bank of America conference. The chief of merchandising said Wal-Mart is studying different store formats beyond its Supercenters that combine a full grocery store with general merchandise.

As we've reported, Wal-Mart has converted at least two vacant big box buildings into what we refer to as hybrid Supercenters. These two stores, both in California's Central Valley, one in Sanger near Fresno and the other in Modesto in the Northern San Joaquin Valley, are "hybrid" because at about 100,000 square feet they are 80,000 square feet smaller than the size of the average Wal-Mart Supercenter, and half the size of Wal-Mart biggest Supercenters, which are 200,000 -to- 230,000 square feet.

The Sanger hybrid Supercenter is open. The Modesto store is set to open this fall. Both of the stores feature all of the departments--both in food, grocery and general merchandise--that a larger Supercenter does. They just are scaled back a bit in size to fit the smaller footprint of the stores.

Additionally, we reported in May that Wal-Mart is converting a number of its Southern California Wal-Mart Discount Store format stores that sell general merchandise and a limited assortment of grocery products but no fresh foods, into Supercenters, which do sell fresh foods and offer a full selection of food and groceries. The retailer is adding from 30,000 -to- 50,000 sqaure feet onto these discount format stores, all of the additional square feet being devoted to food and groceries, including fresh produce, meat, deli and bakery departments.

We've also learned Wal-Mart plans to follow this same Southern California plan selectively with other discount format stores in other parts of the U.S. The retailer also plans to find and convert other vacant big box buildings in the 100,000 -to- 125,000 square foot range, like the Sanger and Modesto Supercenters, into hybrid Supercenters in other parts of the U.S., as well.

Additionally, Wal-Mart has created a brand new Supercenter store prototype. That prototype allows the retailer to build smaller sized Supercenters by merely adjusting certain elements of the prototype design. Sort of a "Supercenter in a box," so to speak.

Our information is this new Supercenter prototype will serve and aid Wal-Mart in its development of the new formats to sell groceries and general merchandise in that merchandising chief John Felming mentioned at today's Bank of America conference.

Wal-Mart has become very agile and nimble at new format development of late, including changing its long held views that its Supercenters can't be adaptable in terms of size and product selection.

As we frequently write in Fresh & Easy Buzz, Wal-Mart is creating a multi-format food and grocery retailing strategic dynamo. It's all part of the retailers plans to be the food and grocery category sales market share leader throughout the United States.

Thus far the Wal-Mart multi-format food and grocery retailing juggernaut includes its Supercenters (now including the first of the smaller hybrids), its Sam's Club stores, Wal-Mart Neighborhood Market, its 40,000 -to- 45,000 square foot stand supermarkets, and now Marketside--which are 15,000 -to- 20,000 square foot food stores, and will feature a limited assortment of discount-priced basic groceries, fresh meat, produce, bakery and deli, a small assortment of natural, organic and specialty foods, wines and beers, and in-store fresh, prepared foods. The stores will feature a kitchen in-store, along with a small eat-in area for about 9 -to- 10 shoppers at a time.

Wal-Mart is far from finished with its new format innovation. Stay tuned. Of course, neither is Tesco, which owns and operates Fresh & Easy Neighborhood Market USA.