Target to Pilot Grocery Delivery Service

Target's chief marketing officer Jeff Jones announced at Target's annual vendor's summit last week that the retailer plans to begin testing grocery delivery "in the very near future."

While Target has provided no additional details, those few words uttered by Jones speak volumes about the current state of the grocery segment.

Grocery retailers continue to be disrupted from every angle as non-traditional grocery retailers attempt to capture a piece of the high-volume business. Over the past few years many big box retailers have entered the space, the healthy and organic craze has redefined shopper expectations, digital grocery shopping has made inroads into traditional brick-and-mortar market share, and delivery has become commonplace.

Home delivery of low-margin groceries will likely not on its own be a huge revenue producer for Target, but the ancillary benefits will likely be significant. First, Target can potentially tap into a recurring revenue stream that can be counted on week after week. Second, by being in constant contact with shoppers Target can build increased engagement and loyalty. Third, and potentially most importantly, the continued access to customer buying habits can feed Target's analytics engines with invaluable shopper data.

"We believe that we have an opportunity there to drive traffic in food and that's why we're in the midst of putting a lot of tests out in front of our guests both product and presentation to get that business on track and to make sure that we've got a really compelling point of view for our guests and then we will measure that over time to make sure that we're making progress," Kathryn A. Tesija, EVP, chief merchandising and supply chain officer said on a recent earnings call with analysts.

To capture those valuable grocery shopper Target has expanded its fresh food assortment in many locations and is in the midst of entering the still emerging home delivery segment. For more information on the changing grocery landscape and a look at five online grocery best practices click here.
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