According to Business Journal, Target Corp. (TGT), as part of its grocery store expansion project countrywide, has taken a step to add more grocery stores in the Milwaukee area. The company is expected to unveil its latest concept in Greenfield, Grafton, New Berlin and the Chase Avenue location in Milwaukee by month end. The company has plans to complete the construction of stores in Delafield and Franklin by October.
Target is bent upon increasing its grocery market share in Milwaukee and across the U.S. Only this year the company has added grocery section to stores in areas like Falls, West Milwaukee, Oak Creek and Waukesha.
Going forward, the company will focus more on store renovations and improving store sales productivity. Target, in fiscal 2011, plans to remodel nearly 380 stores, which include an expanded grocery offering, improved store layout, and enhancement of in-store shopping experience across departments such as beauty, home, electronics and video games. All efforts are aimed at increasing traffic.
Target’s efficient marketing, multi-channel strategy, product innovation, compelling pricing strategy, and new merchandise assortments, should help drive comparable-store sales and operating margins in the long term. We expect the company to gain market share, and believe that more focus on consumable items should boost sales and earnings in a sluggish consumer environment.
Target, like its biggest rival Wal-Mart Stores Inc. (WMT), plans to introduce a smaller store format of 60,000 to 100,000 square feet compared with the current format of 125,000 to 180,000 square feet. The smaller formats would help the company to tap the urban markets, at affordable costs, where real estate remains a constraint. Target will unveil its first smaller format store in 2012.
Target’s shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.
