Target ( TGT ) is one of the biggest retailers in the U.S. and offers a variety of products across hardlines, apparel & accessories, household essentials, home furnishing and pet supplies. However, it still trails its competitors in groceries, which is an essential product category due to its high degree of immunity to macroeconomic fluctuations. Although the company began its operations in the 1960s, it did not introduce groceries until 1995. The share of groceries in Target's overall revenues has grown steadily over the past few years, driven by its enhanced focus and the launch of P-Fresh store remodel program. With the expansion of CityTarget and Target Express stores, the retailer's grocery share will likely increase in the future, albeit at a slow pace.
However, despite showing some progress, groceries are far from becoming a meaningful category for Target. The company earns less than one-fourth of its revenues from food & consumables, and has found it extremely hard to attract grocery buyers due to fierce competition from its cheaper counterpart, Wal-Mart ( WMT ). Although the "cheap chic" retailer is looking to expand its business in urban markets, Wal-Mart's aggressive foray in the grocery space along with the existing vast network of dollar stores, will create a tough environment for Target. Subsequently, we do not see any significant development in Target's grocery business in the foreseeable future.
To read the rest of the story, please go to: NASDAQ