Assignment 7-2.docx - ARGET CORPORTAION THE GROCERY BUSEINSS IN THE BULL’S EYE Read the Target Corp case and answer the following questions 60 points

Assignment 7-2.docx - ARGET CORPORTAION THE GROCERY...

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ARGET CORPORTAION: THE GROCERY BUSEINSS IN THE BULL’S EYE Read the Target Corp. case and answer the following questions. 60 points. Background : In May 2016, Target was one of United States’ largest chain retailers, with nearly 2,000 well-located general merchandise stores and a reputation for being stylish and chic. However, in the wake of the 2008 financial recession, profitability had weakened as a result of allocating more space to low-margin groceries in an attempt to continue to drive traffic. Now that the recession is over, should Target reduce or even eliminate the grocery category to offer a broader selection of clothing and household goods? At the heart of the case is the question: Do groceries “drive a trip” and lead to incidental add-on purchases, or are they crowding out higher-margin inventory? As you know by now, the grocery industry has changed significantly in a relatively short amount of time. The biggest changes have come in the nature of competition. #1 Wal- Mart is now the dominant grocery retailer in the Unites States, followed by #2 Kroger, #3 Alberstons/Safeway, #4 Costco and #5 Sam’s Club. What’s notable is that super stores (Wal-mart) and warehouse stores (Costco and Sam’s Club), which now account for the 3 of the top 5 retailers in terms of market share of U.S. food and beverage purchases, are a fairly recent competitive threat to conventional supermarkets (both Costco and Sam’s Club were founded in 1983). Also, as you may know, the grocery category is not only highly competitive, but yields just pennies of profit for each dollar of sales. Typical margins range from 2 to 3%! With this in mind, deeply consider each of the 4 options presented at the end of the case, in order to determine which strategy you would choose. PLEASE ANSWER THE FOLLOWING QUESTIONS. 1. Imagine that you were working as an intern for Target’s head office. What internal information would you want to analyze to inform the decisions about how to proceed with grocery merchandise? In the past, the decisions to expand the floor space and the product range of the grocery categories were: Grocery “drives a trip” to Target, and While shopping for groceries, customers will pick up additional, higher-margin merchandise.
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