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Target Goes On Offense

02/25/2011

Target predicted yesterday that annual sales could exceed $100 million in six to seven years – a 52 percent increase.

After several years of retrenching the company is coming out swinging. It intends to open 150 stores in Canada in 2013 (see my post “A Bigger Bulleye – Target’s Double Trouble in Canada“). This in spite of being in the bulls-eye of a major expansion by rival Walmart in Target’s backyard – the Twin Cities metro area of Minnesota. Walmart is on a building blitz that will pour $1 billion into Minnesota to build 50 or more stores in the next five to eight years. That’s a lot of shopping opportunity!

In a head to head competition I put my money on Target. Sure Walmart’s 2011 sales are projected to be around $419 billion (yes, that’s a “b”) but they have not successfully integrated the grocery component into their stores. Where Walmart ranks in grocery sales is unclear but in the Twin Cities Walmart places either #3 or #4 behind Target and Cub Foods, according to 2010 data from IRI InfoScan published by Trade Dimensions, a service of the Nielsen Co.

Target’s grocery component has impacted shoppers – including me. Target has added grocery to 462 of its 1,750 stores and plans to remodel about 380 more in 2011. Groceries make Target more convenient and accelerate the average size of transactions. The addition of Starbucks to many Target stores turns the local Target into the destination of choice several days a week for me.

Target said that during the latest quarter the average customer’s purchase rose only 0.8 percent (not mine) but more customers came into the stores, fueling a 1.6 percent increase in transactions.

Target, like many retailers, is better when it’s on the offense than defense. Even with Walmart’s almost personal approach to penetrating the Twin Cities market – Target is definitely pushing for a “bigger Bullseye”.

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