Retailer plans to offer more fresh food items and build new stores near college communities.
Target Corp., in discussing the company’s future with investors, said the company plans to focus on building more stores near campuses at colleges, and to repackage the stores with full shelves and more fresh food items, according to the Minneapolis Star-Tribune.
Target Chief Executive Brian Cornell said at the annual financial community meeting, “These are the things that make Target work. These are the building blocks of our future. And these are the things that will drive growth at Target for years to come.”
The company says it expects the comparable store sales to be in the 1.5 to 2.5 percent range for 2016, and up to three percent or more for 2017. That comes as Wal-Mart Stores, Inc., Target’s largest rival, projected no growth for this year, as did Best Buy, Inc.
The retailer, in announcing the focus on stores near the college campus, said their market research has indicated a lack of overall retail options, from basic apparel to fresh food, around the campus settings, and said that was a real concern for the company.
The executives pointed out they had learned in the past year the food categories that were selling the most at Target stores were also the ones with the lowest growth potential. The company found the opportunities for the most growth were in the areas like produce, dairy and other fresh food offerings. The company says they realize the changes that need to be made were not just re-configuring the displays in the stores, so they plan to assess potential of their items individually.
Target has been adding hundreds of new items, including organic and gluten-free offerings, and the results show the grocery sales grew faster that the overall growth rate of their stores during the last half of 2015.
The company also recognized their distribution systems needed refinements as well. Since last year, the firms analysts have been looking for ways to lower the rate of out-of-stock items in their stores, including redesigning shelf space and trimming the varieties of certain items. The work has cut their out-of-stock rate by 40 percent.
The retailer said it was on track to surpass its goal of cutting $2 billion in costs over two years, announced last year, cuts which included trimming the staff at its corporate headquarters in Minneapolis, and identifying inefficiencies in marketing and with their vendors.