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So how much food will Target sell, anyway?


Hey, don’t confuse Target for a grocery store. America’s No. 2 discount department chain made its fortune selling Saks-style clothing at Kmart prices.

Target’s brilliance at chic and cheap is why throngs of Canadians head south to its stores every weekend. And why those same people were last week cheering the news that Target will take over Zellers’ lifeless leases. None of the hoorays were because Canadians can’t wait to get their hands on Target’s selection of Rice Crispies or Coke.

That’s not to say Target can't be a considerable threat to grocers here if it chooses. While Target isn’t nearly as big into grocery as Walmart, it has in the last year paid a lot more attention to food sales, especially fresh food.

Historically Target stores have had a limited grocery section. And by limited I mean a decent selection of canned and boxed goods, similar to what Walmart stores had in Canada a decade ago. Last year, though, Target announced that it would speed up the introduction of fresh food into its stores.

Target intends to have fresh food in half of its 1,500 stores in the U.S. by the end of this year. The program, dubbed P-Fresh, is a departure from Target’s earlier food strategy, in which full grocery departments were only available at a small number of SuperTarget bannered stores. In P-Fresh stores, about 30,000 sq. ft. of space is devoted to food, with total store square footage of about 125,000 sq. ft.

Like other non-grocery retailers stocking up on milk and cookies, Target sees food as a way to draw in shoppers more frequently. Sales and traffic at Target stores with complete grocery sections are 6% higher than at Target stores that don’t have them.

Target is emphasizing food in a way that goes beyond a few cases of cheese and heads of lettuce. Its newer stores feature plenty of fresh vetagetables and bakery items, all surrounded by refrigerated items like chicken. It also carries sandwiches and other lunch items in stores near offices.

The big question of course is, Will Target bring this new fresh-food focus to Canada? The official answer from the company is “gee, we’re not sure yet.” But somehow I doubt it'll divert from its U.S. strategy and leave all that food business to grocery stores and Walmart.

Even if Target only take a half-hearted stab at groceries, it will certainly draw more food sales than Zellers. The reason is that Target is a much smarter retailer than Zellers and will attract many more customers on a weekly basis to its stores. At many Zellers locations you could shoot a cannonball down the power aisle and not hit anyone most days. Target will do much better and by default its customers will pick up grocery items just because they are in the store.

Of course, for any grocery store in a mall that also has a Zellers, Target could be good news.  Your mall will start to get busier as Target lures in more shoppers. In that regard, Target could be good news. Sort of.

Whole lotta square footage

Remember the nuclear arms race during the cold war? Seems in the U.K. right now there’s an arms race of a different sort, with the top four or five grocery chains trying to out-do one another in store expansion. The Guardian newspaper reported last week that Tesco, Morrison’s, Sainsbury and Asda are together adding 4.8 million square feet of floor space each year. Total floorspace in grocery will rise by one fifth by 2014.

Tesco is adding 292 stores this year, Sainsbury 130, Asda 184, and Morrison’s 19. Waitrose, meanwhile, is adding 39.

As you can imagine, this means big demand for new staff. Tesco, already the U.K.’s biggest private sector employer with nearly 290,000 staff, will have 9,000 vacancies to fill this year and next. Sainsbury will create 20,000 jobs over the next three years.

Alas, the debt-saddled British government is doing its part to help fill those jobs. It’s cutting over 300,000 public-sector jobs.

Who impressed you most in 2010?

That's the question we asked in our website poll recently. Some 500 of you voted and we can now report that Sobeys and its FreshCo format won. Sobeys received 32% of the votes, followed by the "Independent Grocery Retailers" at 31%, Loblaw at 21% and Walmart at 16%. Visit our home page to answer this month's question.

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