On Target: More pharmacies and a low-price promise
SPRING HILL, Fla., and , BRONX, N.Y. —Target expanded its pharmacy presence last month with the opening of 23 new stores nationwide, and extended a bold pricing promise to more aggressively combat Walmart’s assertion that its prices are “unbeatable.”
The addition of 23 new stores, 17 of which feature an expanded fresh food offering, gives Target a total of 1,719 stores nationwide and pushes its pharmacy total to 1,562 units. While that milestone is noteworthy, and pharmacy remains a strategic priority for the company, it is the expansion of food and the stronger stand on pricing that are seen as more significant strategic initiatives even if they are complementary to strategies already established in pharmacy.
Target is out to increase customer traffic in its stores, while simultaneously overcoming the perception among some customers that it isn’t as sharply priced as Walmart.
Expanding the presence of food and consumables is an obvious measure to generate increased customer traffic, and Target took an important step in that regard when it introduced a discount store format called Pfresh, which, as the name implies, includes perishable products. At a new 135,000-sq.-ft. store in Spring Hill, Fla.—an hour north of Tampa—the Pfresh format is on display and quite attractive. The fresh presentation is compelling enough that customers unfamiliar with the much larger SuperTarget concept may think they are in one.
As of the end of the first quarter, Target’s plans call for Pfresh to be in about 100 stores by year’s end, and if it’s deemed to be working, from 2010 most new and remodeled stores will feature the expanded food offering.
Beyond simply adding food, another experiment apparently expanded during July at new stores is Target’s “low price promise.” At multiple locations inside two new stores visited by Drug Store News, Target called out the promise with signing on endcaps at each checkout lane and in the large food and consumables area where Target is most eager to get credit for prices it contends are competitive with those found at Walmart. The pricing promise was tested earlier this year at stores in Orlando, Fla., Denver and Minneapolis, and allows Target to match prices on advertised items from nearby stores.
New messaging around pricing and expanded food offerings is intended to generate more traffic, which ultimately should benefit the pharmacy and healthcare businesses, which are among Target’s best-performing segments. Target already offers a differentiated experience in addition to being competitive with its $4 generic offering, and now it is poised to benefit from more customers being exposed to its prescription and healthcare offerings.