DISCUSSION

Will expanded fresh and frozen food selection drive Target’s pickup business?

June 25, 2020Written by George Anderson

Photo: Target

Target has felt my pain and it wants me back! Okay, the retailing giant hasn’t decided that it’s worth changing its business model for this lone “guest” (Target for customer), but its recently announced plan to expand its selection of fresh and frozen grocery items for its Drive Up curbside pickup program may be the solution I’ve been waiting for since well before becoming familiar with the term COVID-19. One of the challenging aspects of being a Target customer during the pandemic has been figuring out how to get the products you need. It’s not that the chain doesn’t offer plenty of options. There’s same-day delivery with Shipt, standard shipping to your home, in-store pickup, Drive Up pickup and actual in-store shopping. When ordering online however, it’s not uncommon to find some items available for same-day delivery, some only for standard delivery, others for curbside pickup and yet others only available by going into the store. If you’re like me, you’ve found yourself since March prone to abandoning Target carts and placing online orders elsewhere where you can complete them with one click and receive them via a single mode, at your home or curbside pickup. Target’s new plan adds 750 fresh, frozen and refrigerated grocery items, including bakery, dairy, meat and produce. The retailer plans to initially roll out the expanded selection at more than 400 stores across the Midwest before expanding to more than 1,500 locations “in time for the holidays.” It tested the program with expanded SKUS in the Twin Cities area and the Kansas City market before deciding to broaden its reach. “By adding fresh grocery to the pickup services our guests already love, we’re giving them even more reasons to shop at Target,” said John Mulligan, Target’s chief operating officer, in a media statement. “During a time when even more people are looking for different ways to get the items they need, we’ll continue to invest in making Target the easiest and safest place to shop." Moody’s retail analyst Charlie O’Shea sees the move as a positive for Target on a number of fronts. “Curbside pickup will increase sales and shopping frequency, the combination of which will likely minimize the negative impact on margin,” he said Moody’s in an email to the media outlets. “This move, which has been in the works pre-COVID, will result in the attraction of new food shoppers, and also broaden Target’s customer base, which will potentially result in increased sales of its higher margin private and exclusive merchandise," he added. The retailer has experienced a dramatic jump in online sales since states began issuing state-at-home directives back in March. Target has also seen its customers cut back on purchases in categories such as apparel while increasing in grocery. The chain, which had faced in-stock and fresh food handling challenges prior to the pandemic, has been tested even more with the pandemic’s advent.

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