Target Corp. Culling Products in Its Stores to Help Resolve Out-of-Stock Issues
Move reflects trend in retailing and consumer goods industries to simplify consumer selection
Employees at a Target in Jersey City, N.J. on Nov. 26, 2015. PHOTO: BRYAN ANSELM FOR THE WALL STREET JOURNAL
The discount retailing chain is cutting the number of sizes, flavors and in some cases brands on its shelves to help fix out-of-stock issues plaguing its 1,800 stores.
Its merchants are combing through categories to determine how many different packs of water bottles and scents of deodorants should be stocked on its shelves. It also is expanding its shelves to hold more products and working with suppliers to ship goods in packages that match the shelves’ capacity. The goal is to reduce items in the storeroom.
“It’s going to be very surgical, category by category,” Chief ExecutiveBrian Cornell said on Wednesday at an investor event. “We are not taking a blunt instrument approach to this.”
Target isn’t alone in reducing the array of products it offers shoppers. Target’s big-box rival Wal-Mart Stores Inc.is currently undertaking a vast culling of items to simplify selection.
And consumer goods companies, such as Procter & Gamble Co., are in the process of narrowing their focus and eliminating unprofitable product categories. Recently, Procter & Gamble eliminated a sixth of its Olay skin-care products, from acne washes to facial scrubs.
The culling of products is one of several steps Target is taking to address the out-of-stock problems cropping up at its stores, whose inventory has been stretched by the need to serve both shoppers who meander through their aisles and those who order over the web.
The process doesn’t come without pain for suppliers, who could lose shelf space if Target determines that it needs fewer brands on shelves.
Mr. Cornell and other executives described the changes during an annual update of Target’s strategy. The company is coming off its fifth-straight quarter of higher customer traffic in its stores and on its website, as it has refocused its merchandising focus around core categories such as apparel, home good, toys and baby products.
Reducing the variety of items on a shelf is a common way for retailers to address the explosion of products under one brand that can confuse shoppers and complicate the stocking of shelves.
Still, the process has had mixed results in the past. About six years ago, Wal-Mart embarked on its “Project Impact,” focusing on carrying just the most-popular products in store, as well as uncluttering aisles to appeal more to a slightly wealthier clientele. The change backfired, as shoppers grew upset at not being able to find their favorites.
So Target is going slowly. The retailer plans to make the changes removing some of the everyday items it stocks in one store and then roll out the process more broadly to try to avoid a dramatic rebuke from shoppers. “If that works, we’ll go a little bigger,” Target Chief Operating Officer John Mulligan said.
Elsewhere in its stores, Target continues to struggle to figure out how to fix its $18.5 billion grocery business, which is proving to be a more-challenging undertaking than Mr. Cornell, a veteran of supermarkets and the food industry, initially thought.
The retailer recently assigned executive Aaron Alt to focus on improving the supply chain and labor model for its grocery business. Mr. Alt is a roving fix-it executive at Target whose recent projects include winding down the retailer’s failed venture into Canada and overseeing the sale of the Target’s pharmacies to CVS Health Corp.
The company is hiring new merchants with fresh food experience to help manage ordering patterns for perishable items as it adds more organic products. “We’re going to make sure we build this one brick at a time,” Mr. Cornell said.
