Back in April of last year, a RetailWire headline asked the question, “Will Target’s new grocery boss get the job done?” Unfortunately for Anne Dament, the person handpicked by Target CEO Brian Cornell to do the job, the answer appears to be “no” as the company announced she is leaving the company less than 18 months into her tenure.
Neither Target nor Ms. Dament, a former Safeway executive, has commented on the reason for her departure, according to reports. She will leave the company on Nov. 18. Mark Tritton, Target’s chief merchandising officer, will assume her duties while a replacement is sought.
Target’s same-store sales in the last quarter were down 1.1% as traffic declined 2.2% percent. Weakness in the company’s grocery business has been cited as one of the factors in Target’s recent struggles and its decision to lower its future forecast.
“They’re just in a really tough spot,” Brian Yarbrough, an analyst with Edward Jones, told the Minneapolis Star Tribune. “They don’t have enough groceries to drive people to the store regularly. Groceries for Target never turned out to be a destination like they thought it would be.”
Writing in an online discussion last week, Dr. Stephen Needel, managing partner at Advanced Simulations, saw Target’s best bet as bailing on food entirely.
“They should probably scrap food and keep grocery items like household cleaners, laundry, etc. that are easily warehoused and have no expiration date,” said Dr. Needel.
Others on the RetailWire BrainTrust panel, however, suggested that Target could possibly succeed with groceries if they stopped trying to occupy a middle-ground.
“The company needs to make a full commitment to grocery or quit,” said Max Goldberg of Max Goldberg and Associates. “Either strategy carries risks. Devoting more space to grocery will require additional resources (human and financial) and space. Quitting grocery will create a competitive disadvantage against Walmart.”
“I’d prefer that Target make a decision to either be a full-line grocer (this is going to present the biggest challenge), a private brand destination (e.g., Aldi-esque), or a c-store (think “7-11 inside”),” said Dave Wendland, vice president of Hamacher Resource Group. “Once identity is determined, Target must rally around that focused business and return to its more effective marketing roots.”
Others noted that Target might be in too deep to back out.
“It’s easy to say that Target should exit the grocery business, but grocery now accounts for 20% of Target’s revenue and the retailer is in no position to absorb a loss of this magnitude,” said Ross Ely, president and CEO of Prologic Retail Services.
“The company spent billions on remodels and infrastructure to establish the business and it doesn’t appear to have a replacement strategy waiting in the wings,” said Dick Seesel, principal at Retailing in Focus. “Perhaps Target should hire somebody from a more disruptive grocer (think Aldi or Trader Joe’s) who can offer up a more innovative, curated approach to the category.”
And one BrainTrust member offered a way Target could possibly get out in front of the competition.
“Here’s my suggestion: take it all online,” said Lee Peterson, EVP of brand, strategy and design at WD Partners. “Do online grocery in select markets only and store it in the back of key locations for BOPIS and shipping. It’s just too big of an investment for front of house during this era of shrinking physical retail. Why bother when most likely you’ll be closing a lot of stores in the years coming up?
“You’re going to wind up competing with online grocers anyway, why not start now?” said Mr. Peterson.