Target (TGT) Aims for Millennials in New Grocery Plan - Stocks in the News
Millennials—those born in the 1980s and 1990s—hold immense power in business decisions made by top companies, and they probably don’t even realize it. They are the target audience for many right now, ranging from retail companies to the food industry. So, it comes as no surprise that Target Corp (TGT) is viewing this specific demographic with dollar signs in their eyes.
More specifically, Target is looking to switch up their grocery offerings by stocking items like quality coffee, bottled craft beer, fresh meat, Greek yogurt, and “classier” snacks. In other words, Target is aiming for the Whole Foods Market (WFM) and Trader Joe’s appeal, grocery stores that are very popular with the millennial crowd.
The changes will most likely expand on a past promise to include more organic, natural and gluten-free foods to its selection—a change that would mean a decrease in shelf space for some of the large packaged food companies like Campbell Soup Co (CPB), Kraft Food Groups Inc (KRFT), and General Mills Inc (GIS).
Originally, Target expanded its grocery options hoping that customers would come to stores for low-margin food items and then indulge in more high-profit items like a new skirt, living room curtains or a throw blanket. However, that plan came with some hurdles. After an initial increase, traffic began to fall and margins narrowed.
Fixing the failing grocery department is high on new CEO Brian Cornell’s to-do list, as the department brings in about one-fifth of the company’s $73 billion annual sales.
In addition to featuring more fresh and healthy grocery options, Cornell wants Target to make its style, baby, kids, and wellness categories stand out, as well as opening smaller format stores, increasing Target’s digital sales, and having a more localized assortment in stores around the country.
The retailer is looking to invest $2 billion in order to make this happen, but as a result, several thousand jobs will have to be cut. Target did not say the exact number of jobs that will be lost.
Since market opening, Target Corp.’s shares have risen a meager 0.08%, and sit at a Zacks Rank #2 (Buy).
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