Large-Format Value

Target has been extremely busy of late on multiple fronts. It has been playing catch-up with Walmart, Costco and Meijer in the grocery department and, like Walmart, has unveiled a smaller footprint concept that can be shoehorned into urban sites much too small to handle traditional discount stores.

Target spent $500 million last year rolling out its PFresh initiative, which is basically retrofitting stores with more fresh food and grocery merchandise. The conversion continues this year, with Target retaining a keen approach to pricing, according to Kantar Retail, which ran a “market basket” comparison of food and non-food items found at both Walmart and Target. The survey, which excluded promotional items, found that the total ticket for two baskets of identical nationally-branded items purchased at stores about a mile apart “would have been nearly on par.”

Downsizing is the watchword among big-box retailers. Walmart has been testing several prototypes that might be suitable for urban locations, some as small as neighborhood convenience stores with similar grab-and-go merchandise. Though not quite a segment power player, supercenter operator Meijer has been experimenting with downsized, grocery-oriented stores in Chicagoland, opening 90,000-sq.-ft. units (roughly half the size of its traditional stores).

Target is seeking to place smaller units in inner-city food deserts in Chicago, Los Angeles, San Francisco and Seattle. “If successful, this format will provide us more flexibility to operate in densely populated areas on sites that won’t accommodate our larger-store formats,” says Target chairman, president and CEO Gregg W. Steinhafel.