Photo by Jobmouse.
I know what you’re thinking: a fancy organic-pushing grocery store like Whole Foods inside of an affordable department store like Target? When would that ever be a good idea?
Well, according to renowned investor firm Bernstein, right now would be the perfect time for the two stores to get together.
Target definitely needs some way to bounce back, and investors are looking for any and all solutions to do so. The chain of department stores suffered a huge hit last year, tumbling 35% in share prices. It’s grocery department, which is often regarded as low quality and frequently undersells, leaving food to waste on the shelf, could use some massive retooling. And while Target did bring in a top name from food manufacturer giant Kroger to help update their grocery section, they could benefit by teaming up with Whole Foods for a low-cost crossover that brings brand recognition to Target’s food offerings.
Whole Foods, on the other hand, is facing a host of problems as its position in the organic grocery store market begins to crumble. As more organic selling locations pop up, Whole Foods has begun to suffer from falling foot traffic, declines in sales, and investors that want to reevaluate the entire company structure. By placing their produce and other products inside of Target, Whole Foods doesn’t have to invest a lot of money into new growth directions and brand image improvement.
There’s also plenty of overlap between the customer bases of both stores. Food Dive reports that 65% of customers who shop at Whole Foods also shop at Target, meaning that recognition and initial traffic already exists. The convenience of getting Whole Foods-quality produce at a Target store and knocking out two shopping trips in one would definitely draw some appeal.
On paper, it sounds like a great idea. Would it actually happen though? Whole Foods would likely be down for the idea, since their investors are looking for new ideas. However, Target’s hiring of the Kroger executive signals an opposite direction, as they seem to want to solve their grocery issues by themselves.
If both companies did agree to it, though, it would be a very interesting combo store that would cause a new buzz and rejuvenate both stores’ images.