TGT Target Corp

By Khadeeja Safdar 

Target Corp. is building dedicated teams to manage the grocery sections of its stores as part of an effort to turn around declining sales in its food business.

Grocery employees will no longer work in other parts of the store and they will receive specialized training, including handling backroom inventory and interacting with customers. Each grocery team will have 10 to 60 employees, depending on the store.

The changes have already been rolled out to about 450 stores and are expected to appear in another 150 by next month. The new approach is part of an effort "to improve our offering, better cater to our guests and drive growth," said Katie Boylan, a Target spokeswoman.

The company declined to discuss the cost of the program or how the changes might affect worker wages.

The stakes are high for Target to improve groceries, which account for about a fifth of its revenue. Fewer shoppers visiting stores to buy its perishable foods has been a drag on profits at a time when the retailer is facing declining sales.

Since taking over in 2014, CEO Brian Cornell has tried to make Target a more compelling destination for groceries. The former Safeway Inc. and PepsiCo Inc. executive has changed leadership in the category, added more organic items to the assortment and invested in store design.

Under the new workforce changes, Target has created a regional leadership position called grocery director to supervise strategy. Each grocery director oversees food-related decisions at about 60 stores and reports to Target's store operations team at its headquarters in Minneapolis.

The company has so far hired 10 people with expertise in groceries for the salaried position and is planning to add one-to-two per key market. This person will "provide education and oversight that helps store teams make more informed decisions," Ms. Boylan said.

Analysts say the new setup is a step in the right direction but won't be enough to transform the retailer into a food destination. Having a specialized workforce and leadership closer to the store level "will probably help improve their groceries, but it doesn't change the fact that there is friction for the shopper on what it means to go on a Target shopping trip," said Kantar Retail analyst Amy Koo.

The changes in the grocery operating model are spearheaded by Target executive Aaron Alt, who was brought in earlier this year with the title senior vice president of grocery transformation. Mr. Alt is working to streamline the backroom area in stores and allocate more resources to the front, according to a person familiar with the matter.

Despite efforts to improve performance, grocery sales declined during the second quarter. The company also cut its annual profit target last month and warned same-store sales would be flat to down 2% for the fiscal year.

In addition to the labor changes, the company has also said it plans to increase grocery promotions and marketing efforts.

Write to Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

September 08, 2016 02:48 ET (06:48 GMT)

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