Target Works to Enhance, Expand
Cecile Corral -- Gifts & Dec, February 21, 2005
Target Corp. this year will push ahead with supply chain and product development enhancements, but also plans ambitious expansions in its food and pharmacy offerings.
Target plans to leverage the large-product and seasonal-goods transition system it put in place last year to boost in-stocks and further reduce store handling expenses. The company this year will expand the number of events it tracks under this system to 45 from 21 last year.
Gerald Storch, vice chairman, used the eight-week “Global Bazaar” program introduced post-holiday as an example of “a major transition program produced on five continents and tracked using this process.”
He added that by beefing up sourcing and logistical capabilities, Target has increased its direct penetration of imports to nearly 30 percent of total sales. And Target's investment in a bi-coastal warehouse network has allowed it “to emulate service provided by our best domestic vendors, resulting in higher margins and better in-stocks,” he said.
As a result, the company will increase its direct import levels even more in 2005, Storch said, adding that direct importing is “an evolutionary and strategic initiative we expect to continue to improve on and expand in share, spreading it broadly across the store in apparel and home.”
To accomplish this feat, Target is in the process of implementing new technologies and programs intended to boost overall speed and reliability, said Storch.
Last year Target increased its overall distribution network receiving/productivity level by 20 percent through a new automated receiving technology that receives labels and inducts cartons into distribution centers. This year, Target expects to further increase that rate by 10 to 15 percent, as well as improve data integrity and reduce lead times by one to two days.
Its import warehouse this year will install a voice-pick technology that will do away with labels, reduce expenses and improve accuracy for goods moving to the regional distribution centers, Storch said.
The retailer also plans to expand its single-day arrival program, setting a specific appointment day rather than allowing for a multiple-day cancel window for goods coming in.
And Target continues to grow its RFID program, Storch said, “committed to leadership in this technology as it develops …with a prudent, disciplined approach during this developmental stage.”
In merchandising, Target is preparing to unleash a rash of new product developments.
Next month it will unveil its much-anticipated Fieldcrest Classic and Fieldcrest Luxury brands for bed and bath as well as the Isaac Mizrahi Home collection.
And later this year it will show an updated lawn and garden offering that will include exclusive merchandise from Sean Conway.
But it is in pharmacy and food that Target plans to be particularly aggressive in building market share.
The retailer will open 100 new pharmacies this year and, more importantly, launch its new Clear Rx system — a new pharmacy bottle design that features a flat panel for the drug label with larger print for critical information, a color-coded ring around bottles that distinguishes for which family members the medicine is intended, and an enhanced liquid dispenser to ease administration of medicine to small children.
“This is a break-through new pharmacy system that will resonate with our guests and hopefully get them to switch from their local pharmacy to us,” said Gregg Steinhafel, president, Target Stores.
Target Stores is also “intensifying” its focus on food, particularly during key holidays — Easter, graduation, Fourth of July, Thanksgiving and Christmas, Steinhafel said. It is offering more simplified dining and entertaining solutions, with more prepared foods, recipes for meals that can be made in 30 minutes or less, and the addition of wine to almost 300 stores.
Target is also offering a broader assortment of healthy food alternatives such as all-natural chicken, low-carbohydrate potatoes and trans-fat-free baked goods. Additionally, it is expanding its offerings of organic products and locally-grown produce.
Soon, Steinhafel added, a new line of USDA Choice Angus beef will be added to the meat department.
In the fourth quarter, Target Stores was also encouraged by the performance of its new Global Bazaar program post holiday and learned from it that it had an opportunity to trend up in product and price points in the future.
“We found that our guests connected with these goods, and that gives us better confidence in going up (in price,)” Steinhafel said. Such goods from the program include home textiles and accessories, he added.
In other news, Target will open 110 new stores this year — 26 in March.
In e-commerce, Target.com, coming off a thriving fourth quarter and year, will continue to expand its offerings, including expanded assortments in home textiles and furniture, among other categories.
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