Target exec talks about food strategy in Canada

12/1/2011

Food will be an important part of the product mix when Target opens its first stores in Canada in March 2013, says the man heading up merchandising for the discounter’s Canadian arm.

John Morioka told an audience at a Food and Consumer Products of Canada breakfast Thursday that a fill-in grocery section really drives traffic at its discount department stores in the U.S. That will likely be true in Canada as well, he said. 

But “we’re still working through what that will look like in Canada,” Morioka, Target’s senior vice-president of merchandising, said when asked whether the Canadian food departments would be identical to Target's 30,000-square-foot P-Fresh food departments in the U.S. (photo above). They offer a limited selection of fresh products as well as dry and frozen groceries.

Morioka confirmed that Target would not, for the moment, bring its full-grocery superstore format, called SuperTarget, to Canada.

Morioka gave a brief outline of Target’s plans for the next year as it gears up to take over the leases of Zellers stores across the country.

Right now, Target Canada is still “hiring our team” and expects to have it in place by the first quarter of next year.

He said Target has a database of some 4,000 vendors that wish to do business with it, and that between the end of the first quarter and into summer 2012 Target will be talking with vendors on issues of merchandising and product assortment.

“Have some patience with us as we work through that process,” he told the audience of consumer goods makers and food brokers at the FCPC breakfast in Mississauga, Ont.

Morioka said he expects a significant number of food products will be unique to Canadian stores. By comparison, in other departments, such as apparel, the overlap with the product selection of American Targets will be greater.

The flavour profile of American and Canadian shoppers is not the same, he noted.

But, he added, Canadians who flock to Targets south of the border “want to have the same experience that they get in the U.S stores.”

He said that in addition to a low-price discount strategy, Target excels at offering shoppers unique items. The company often works with well-known designers on clothing, as it did recently on a knitwear collection with Italian fashion house Missoni.

In consumer packaged goods, he cited examples of where Target co-ordinates with manufacturers to offer seasonal variations of products and packaging–for instance, Winter Oreos.

He also cited Target and Procter & Gamble working together to put men’s toiletries in a separate aisle from women’s, after research found men don’t like sharing the personal care aisle with the opposite sex.

Morioka said the average American Target shopper is 40 years old, which he said is younger than the typical discount consumer. Half of all Target visitors are university educated and have children at home. He doesn’t expect Target shoppers in Canada will stray from that profile.

Target plans to open 125 to 135 stores in 2013 in Canada and to have 200 within a decade.

Previously the company had said it expects to top $6 billion in sales within six years of opening. Analysts expect Target's food sales to reach $700 million after its first year in business in Canada.

In his speech at the FCPC breakfast, Morioka also touched on Target’s new supply deal with Sobeys that will see the country's second largest grocer act as a food wholesaler to Target in this country. “We’ve been impressed with everyone we’ve met ,” he said, noting that Target U.S. has also been supplied by grocers as well, notably Supervalu.

Morioka, who has worked at Target since 1994, took on the Canadian merchandising job in August. Before that, he had worked on the development of CityTarget, the retailer’s 125,000 sq. ft. urban format that’s opening in Chicago.

Morioka joked in his speech that when he and his family moved to Toronto this summer "I realized I was very popular with the moms in the neighbourhood once they found out I worked for Target. I thought it was my charm or my American accent."

But, of course, it was because he works at "Tarjay!"

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