Target Corp. said Wednesday it intends to offer food assortments that are clearly differentiated from its competition.
“We believe we should continue to present a meaningful food offering in our stores and online, but we need to ensure our food offering is uniquely Target," said Brian Cornell, chairman and CEO of the Minneapolis-based company. "Our identity in food will continue to involve a combination of national brands and our own and exclusive brands, with increased emphasis on natural and better-for-you products.”
He said the company’s merchandising team “is stepping back, listening to guests, really understanding what the Target guest is looking for in food and making sure we curate the right items that meet their needs from the standpoint of assortment and also newness.
Brian Cornell
Brian Cornell
“We recognize we have an opportunity to connect with guests in a different way when it comes to food, so as we go forward you should expect to see more natural and organic offerings, including a number of exclusive items from manufacturers that can bring great innovation.
“We’re not streamlining our food offering or de-emphasizing food or walking away from it, but we certainly want to make sure we put our mark on the food category with items that are uniquely Target, that are on trend and right for our guests.”
Cornell made his remarks during a conference call with analysts to discuss financial results for the third quarter and nine months ended Nov. 1 — a period in which Cornell said the company was encouraged by improving trends in the U.S. and determined to improve business in its Canadian segment.
The company is making improvements in operations, pricing and assortment in Canada, Cornell said, “and we’re eager to measure how our guests respond. Consumer response “will inform our perspective as we continue to assess our longer-term potential in Canada. To succeed [there] we know we will need to see improved financial performance from every Target store in Canada over time.”

For the three-month third quarter Target reported net income of $352 million, up 3.1%; for the nine months net income fell 30.9% to $1 billion.
Sales for the quarter rose 2.8% to $17.7 billion, encompassing an increase of 1.9% to $17.3 billion in the U.S. segment and 43.8% to $479 million in Canada, with comparable-store sales up 1.2% in the U.S. and 1.6% in Canada.
Cornell said U.S. comp growth was better than the anticipated range of flat to 1% — with positive comps in all three months of the quarter — and benefited from a growth in digital sales of more than 30%. CFO John Mulligan said Target expects digital sales growth to accelerate to nearly 40% in the fourth quarter.
Although U.S. transactions in the quarter declined 0.4%, “performance was more than a full percentage point stronger than traffic trends through the first half of the year,” Cornell pointed out.
Grocery sales in the quarter were up in the low single digits, the company noted.
For the year to date, overall sales increased 2.2% to $52.2 billion — up 1% in the U.S. to $50.9 billion, with comps up 0.3%; and up 90.3% in Canada to $1.3 billion, with comps declining 3.3%.
During the call Cornell discussed Target’s five key operating principals:
• Establishing strategic clarity, with flexible fulfillment as a top priority. “As we plan for the future, we will take a channel-agnostic view of growth, allowing our guests to interact with us where and when they want — online, in stores and on their mobile devices,” Cornell said. “And we will continue to push ourselves to innovate and build capabilities and features into our digital experience that will inspire guests while removing friction from their daily lives.”

• Defining what the company stands for “by increasing the focus on signature categories we can and should be known for,” with increased investments planned in capital, marketing and product development in such areas as baby, kids, wellness and style. “That does not mean we’re abandoning our other categories, but we will have different expectations for those categories compared to the ones in which we’re investing to outperform,” he said.
• Focusing on work that adds the most long-term value, including localization and personalization, such as generating product recommendations on its digital platform. “Even though this new engine is still in the beta rollout stage, conversion rates from its recommendations are already exceeding what we were previously seeing with a third-party product, and we expect conversion rates will expand further over time,” Cornell said.
• Investing to support the company’s priorities, including expansion of smaller store formats like City Target and Target Express to serve more urban areas.
• Fostering a culture of accountability at all levels to control costs to help fuel investments in growth.