Impact of Target PFresh Seen as Minimal
The PFresh food sections offered by Target Corp. in two-thirds of its discount stores are having only a minimal impact on traditional supermarkets, industry observers told SN — and they question whether that will change much going forward.
The PFresh assortment of dry groceries, frozen and refrigerated foods and pre-packaged meats, produce and baked goods covers about 17,000 square feet at 875 Target stores, accounting for sales last year of approximately $13.3 billion — about 19% of Target’s total volume.
The company said last week it will add PFresh sections to 90 more discount stores by late June.
“The way Target has set up PFresh allows it to talk about a grocery offering without really competing in fresh,” Neil Stern (left), managing partner with McMillan Doolittle, Chicago, said. “It’s more of a strategic move to give the appearance of being in the food business without actually committing the space and resources to doing it, which is a very deliberate and very clever strategy.”
It’s hard to measure what impact PFresh is having on traditional supermarkets, Stern said, “because we don’t see Target showing up in any substantial way in market-share numbers.” (See the table with up-to-date market shares from Metro Market Studies.)
http://supermarketnews.com/retail-amp-financial/impact-target-pfresh-seen-minimal
From what I noted at my local recently remodeled Target store, these folks just don't get it. The checkouts are now backed up, the store shelves show significant out of stocks and the impression I am left with is one of just trying to squeeze out more or different sales without having to actually spend anything to generate those sales (like putting product on the shelf).