Is Target crazy to swap granola bars for candy at its checkouts?

Discussion
Sep 23, 2015
Matthew Stern

Even with the proliferation of self-checkouts and the attention-diverting use of mobile devices making impulse buys in the checkout line less of a sure thing, the front-end is still a big source of soda, candy and magazine sales for many grocers. Target, however, is turning their product assortment at the registers into a statement of another sort — one that promotes the chain’s newfound focus on health and wellness.

According to The New York Times, Target has announced that it will be replacing the unhealthy but familiar selection of sodas, sugary sports drinks and candy bars available near the checkout counters with healthier fare, such as granola bars. The Times indicates that Target plans to switch out the assortment in 30 test stores to figure out how much junk food should go.

Fortune reports that popular granola bar brand, KIND, will appear at the checkout, as well as snacks from Target’s natural/organic private label, Simply Balanced.

The choice to pull junk food from the checkouts is but one of the chain’s attempts to court the health-conscious shopper, and to show a broader commitment to health overall, in its ongoing attempt to rebrand. It comes alongside an announcement that the company will be providing free FitBit activity trackers to 300,000 employees as part of a program to incentivize employee wellness.

Target Made To Matter

Source: Target – “Made to Matter” collection of wellness-oriented brands

The question of whether a shopper looking for a chocolate bar would be as likely to grab a healthy snack on the way out of the store, or instead forgo an impulse buy entirely, may be up in the air. But Target is promoting the health-related changes in the context of social responsibility as much as potential profit.

"There’s both a huge business opportunity here and a bit of a moral imperative," said Christina Hennington, SVP of merchandising at a press briefing, quoted in Fortune. "Our ultimate goal is to improve the health of the nation."

The chain has named wellness as one of the four categories it is now focusing on, the others being style, kids and baby products.

Target has also recently entertained other shakeups geared towards establishing itself as a retailer focused on health and wellness. In May, the chain told a few big food suppliers that it intended to reduce the promotion of some national brands in favor of smaller natural and organic brands that would appeal more to shoppers skeptical of the big CPG companies.

Earlier in September, Target announced that it would be ending its "Take Charge of Education" charity program, which has raised $1 billion since 2010, and would move its donation money towards wellness-oriented charitable endeavors.

Will Target’s change of assortment at the register benefit the retailer and make it stand out as a wellness-oriented chain? Are there any potential downsides to Target’s promotion of wellness?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I believe they would do well to stock some non-sugary juices in the coolers, and swap out some of the trashy gossip rags for titles like Clean Eating to reinforce the commitment."
"Let’s start with the question, "How many smart moves has Target made in the past few years?" I’m pretty sure we can’t name many. The best we can say is that they are testing this rather than rolling it out nationally."
"Retailers essentially have three choices in assortment: They can stock what customers buy. They can stock what customers say they want to buy (hint: usually not the same as number one above). They can stock what they think customers ought to buy — regardless of what customers say."

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19 Comments on "Is Target crazy to swap granola bars for candy at its checkouts?"


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Anne Howe
Guest
4 years 2 months ago

Corporations and retailers alike should pay attention to Target’s focus and action on “what really matters” to people, and eating healthier certainly qualifies. Target is taking bold steps that shoppers can see, feel and respond to. Their strategy is not rhetoric. I applaud and support this action. It sets Target apart from its competitors in a distinct way that delivers tangible benefits to shoppers.

I believe they would do well to stock some non-sugary juices in the coolers, and swap out some of the trashy gossip rags for titles like Clean Eating to reinforce the commitment.

Dr. Stephen Needel
Guest
4 years 2 months ago

Let’s start with the question, “How many smart moves has Target made in the past few years?” I’m pretty sure we can’t name many. The best we can say is that they are testing this rather than rolling it out nationally.

The desire for healthy alternatives (about which I’m skeptical) is usually balanced by the alternatives — you are getting a choice. Adding more healthy snacks to the front end makes sense to me. Replacing the front end with healthy snacks does not sound so hot — go look at CVS’s performance since they dropped tobacco.

Bob Phibbs
Guest
4 years 2 months ago

Niche is becoming mainstream when CVS can kick out tobacco and Target can move candy to the aisles. With every Sunoco, Staples and grocery store carrying more and more junk food it does seem like a way to create a healthy buzz. It doesn’t hurt that KIND bars don’t tend to get promo pricing like Snickers which improves margins.

Chris Petersen, PhD.
Guest
4 years 2 months ago

The operative phrase in this article is “Target plans to switch out the assortment in 30 test stores to figure out how much junk food should go.”

If a retailer is in business to make a profit, then a core essential is optimizing assortments to optimize profit per square foot. SKU rationalization should be an ongoing process, not an event. Testing is essential to measure ROI.

At the end of the day the retailer can position their brand in different ways, but they do not make the final assortment decision — consumers decide by how they vote with their wallet, plastic and mobile pay.

Kelly Tackett
Guest
4 years 2 months ago

It’s a smart move. I believe either Lidl or Aldi has done it over in Europe and isn’t faring worse for it.

Ben Ball
Guest
4 years 2 months ago

Retailers essentially have three choices in assortment:

  1. They can stock what customers buy.
  2. They can stock what customers say they want to buy (hint: usually not the same as number one above).
  3. They can stock what they think customers ought to buy — regardless of what customers say.

Target is testing something between choices two and three. I’m guessing this is more of a marketing positioning statement, in a very visible place in the store, to reinforce the “anti-Walmart” message Target seems to be pursuing. It may be a good strategy. It is certainly better than the “more Walmart than Walmart” path they seemed to be on before Cornell got there. The big question is, and I suspect this is why this idea is in careful testing, just how much will this impact the profitability in the short term? (Hint number two: a lot more than you may think based on the “percentage of sales” numbers you have seen published.)

Ryan Mathews
Guest
4 years 2 months ago

If by benefit one means add to sales then the answer is no, at least in the near term.

Will the move help Target stand out? Of course.

We have models to help us understand the probable impact. CVS lost a ton of sales since it discontinued selling tobacco products. At the same time they continue to sell alcohol, candy, Twinkies, soft drinks loaded with sugar, etc. It’s the retail equivalent of being a little bit pregnant. If you really want to be a “wellness” chain you would stop selling EVERYTHING of questionable nutritional value.

As to downsides, there are lost sales and blowback from both conservative shoppers who oppose “nanny state” retailing and progressives who feel the chain hasn’t gone far enough.

Roy White
Guest
Roy White
4 years 2 months ago

Ultimately, the only way this will work is to first of all make the front end its own department, and then plan out how healthier products can be rationally integrated into the current check-out mix. Otherwise it will be health products invading a long-established front-end paradigm.

In addition, the health and wellness initiative needs to be a carefully coordinated store-wide program with many different departments contributing to it. When CVS (who is now Target’s pharmacy operator) dropped tobacco, it already had the mantra of a prescription and health-oriented drug store, and so the initiative worked beautifully. Target does not have that health-oriented mantra since it is a general merchandise retailer with a very broad array of products in a large store.

Target may not be crazy doing this, but it has to be more than just a single, isolated program. It will only be sane if it is part of a whole, major program.

Roger Saunders
Guest
4 years 2 months ago
Target might do well to admit that the “moral imperative” is something that they want to handle with caution, unless they are asked to be the morality police for a laundry list of products and services. Understand the health factor issues. Have to be concerned if Target is paying close attention to their existing shopper base. Based on the Prosper Monthly Consumer Survey of over 6,500 adults 18 and older spend, on average $18.98 each month on snack food products. Target shoppers spend $20.28 per month, at a 6.8 percent higher rate. When asked the reasons they choose their snack food, Target shoppers rate their responses in this manner: taste (44.4 percent), trust the product (39.8 percent), price (39 percent), on sale (29.4 percent), natural/organic (11.1 percent), and gluten free (4.1 percent). In terms of frequency of purchase, here is how the consumer states they are purchasing product: Candy — weekly (12.4 percent), two to three times per month (19.6 percent), never (17.0 percent). Energy bars — weekly (5.3 percent), two to three times per month… Read more »
Carol Spieckerman
Guest
4 years 2 months ago

I’m a bit baffled by Target’s overarching attempt to position itself as a wellness destination, a space/philosophy that retailers like Walgreens have more logically claimed. Ben’s call out on the delicate balance between offering what customers say they want to buy and attempting to shape what they “should” buy is valid. There is a fine line between asserting a curatorial point of view, which Target has had the authority to do in categories like apparel and home in the past, and crossing the line into dictatorial retail. Target’s authority in grocery and “wellness” has not yet been established. Crossing lines could therefore prove perilous.

Lee Kent
Guest
4 years 2 months ago

How much of the population thinks wellness when they think Target? Not many! Over the years, folks came to think shabby chic when they thought Target. Then Target lost their way a bit.

I’ll bet that if they were to poll their customers, I mean “guests,” they might just find that said “guests” would prefer the chic back.

Why oh why has Target not looked at fun, chic and maybe a little more on the healthy side for their direction?

This approach calls for a whole new invention of the brand.

But that’s just my 2 cents.

Li McClelland
Guest
Li McClelland
4 years 2 months ago

When a retailer actually uses the sanctimonious phrase “moral imperative” in a press release, as a customer you know it’s probably time to move along — and as a stockholder you know that management has utterly lost its way. (And where, we wonder, was their vaunted “moral imperative” when it really mattered, i.e., when it came to protecting their customers’ data from hackers and abuse and notifying them in a timely manner when it occurred?)

Brian Kelly
Guest
4 years 2 months ago

Despite the best intentions, is it the role of a mass retailer nanny its customer? It is up to the customer to choose. And they will.

Wellness means different things to different folks. While there is a shift away from over processed foods, there is also a doubling down on meat and liquor. Confusion around cholesterol and carbs has unleashed a diet some MDs consider unwise. The cause of Type 2 diabetes isn’t any more clear.

On Halloween, who wants to trick or treat at the home that gives sugar free candy, a tooth brush or an apple?

There is risk in being perceived as being irrelevant. At the end of the quarter, a comp needs to be delivered.

Or as we like to say, “retail ain’t for sissies!”

Dave Wendland
Guest
4 years 2 months ago

Will Target stand out as a wellness-oriented chain? Perhaps not. But is our country facing a glut of chronic conditions and escalating healthcare costs because of dietary choices and inconsistent healthy options? I would say yes.

The downside may be a disconnect between “health” and other messages throughout other areas of the store. If the test goes well, I do think it can and will extend throughout the chain.

Kai Clarke
Guest
4 years 2 months ago

This is a poor retail decision. Target is trying to tell the customer what they want, when in reality, it is the customer who impulsively determines their purchase at the checkstand—if it is available. There is a good reason that soda and candy are at the front end. These are proven impulse sales drivers, which the customer prefers. Pushing granola bars at the front end represents a poor, revenue-losing proposition, which Target will soon discover contradicts their profit goals.

Craig Sundstrom
Guest
4 years 2 months ago

Is this a well thought out strategy, or a company flailing around looking for the next big thing? When someone says there’s “a huge business opportunity here,” it means there is an idea which no one is trying; either no one has thought of it yet, or it’s a bad idea. Target will get to find out which one it is.

Mike B
Guest
Mike B
4 years 2 months ago

Dumb move to remove ALL of the current candy and soda; at least keep the top 10-20% of items. Smart margin move to replace some of those items with the higher margin and perceived healthier brands.

Target seems to be fooling itself a little as to who its customers are. At my local Target and many in California, they have a similar customer to Walmart and other discount chains like Ross or WinCo.

Susan Partington
Guest
Susan Partington
4 years 2 months ago

I bet this reduces shrink! Not that granola bars are all that much healthier than candy.

Carlos Arambula
Guest
4 years 2 months ago

It’s a point of difference, a positive point of difference. The only downside will be if vetting of products is lax and an embarrassingly bad product is placed in the checkout space.

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Braintrust
"I believe they would do well to stock some non-sugary juices in the coolers, and swap out some of the trashy gossip rags for titles like Clean Eating to reinforce the commitment."
"Let’s start with the question, "How many smart moves has Target made in the past few years?" I’m pretty sure we can’t name many. The best we can say is that they are testing this rather than rolling it out nationally."
"Retailers essentially have three choices in assortment: They can stock what customers buy. They can stock what customers say they want to buy (hint: usually not the same as number one above). They can stock what they think customers ought to buy — regardless of what customers say."

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