Target uses Minnetonka store for tests while grocery makeover is in progress

Amid all of the moving parts at Target Corp., one of the biggest question marks is an upcoming food makeover.

The overhaul aims to make Target's grocery department into more of a destination instead of an afterthought. But it's already taking longer than expected to figure out.

When executives unveiled a strategic road map in March, they set an ambitious timeline for the food overhaul, telling analysts they would roll out the most substantial changes in 2016.

Now, Target officials say they need more time to hash out and test ideas — 2017 is the new rollout time.

"We want to get it right," Target spokeswoman Katie Boylan said. "It's less about how fast we go and more about making sure we implement the right kind of changes. We're trying to be really judicious in our approach."

Some of the questions on many analysts' minds: How serious is Target in investing to improve its fresh produce? How far will it go in becoming a specialty grocer that focuses in organic, gluten-free and other artisanal products? And how radically different will the department look and feel?

"Everyone has the question: What the heck are they doing?" Amy Koo, an analyst with Kantar Retail, said at a workshop in Minneapolis last week. "We know they are experimenting … But I'm pretty sure their plans have not gelled yet."

The new timeline shows how tricky this project is for Target as it weighs the costs and benefits of trying to differentiate in the food sector.

Food is an area of expertise for Target CEO Brian Cornell, who previously held executive posts at Sam's Club, Safeway and PepsiCo. In April, he hired Anne Dament, whom he worked with at Safeway, to head up the effort as Target's senior vice president of merchandising in groceries.

To help guide the long-term plan, Target has been rolling out a series of small tests in select stores across the country, including the SuperTarget in Minnetonka, which is finishing a $10 million remodeling.

When shoppers now enter that store, they see a new kiosk on wheels — reminiscent of a kitchen cart one might find at Williams-Sonoma — that displays boxes of multicolored pasta, jars of premium marina sauce, bottles of white truffle oil, white bowls and sleek place mats, colanders and cooking utensils. Other carts offer meal or party ideas with both ingredients and related cooking tools.

"It is to spur ideas and inspire our guests," Target's Boylan said. "It's all around thinking about food as an occasion and less as a transaction."

It's also one of 450 Target stores across the chain with a bigger assortment of gluten-free, organic, and healthier items.

In the dairy aisle, there is an array of more than 15 yogurt brands, including several artisanal lines such as Siggi's, Noosa, Evolution, and Elli Quark. Early next year, Target will also add Wallaby yogurt to its lineup — a brand found at Whole Foods and other specialty stores.

And in a Minnetonka-specific test, Target has put a non-refrigerated display of granolas next to the yogurt as well as other potential add-ons such as organic agave nectar, organic black chia seeds and a variety of raw nuts as a way to cross merchandise throughout the store.

The Minnetonka SuperTarget also features many of the new 150 items Target has introduced this year in its better-for-you, private-label line, called Simply Balanced. They include organic smoothie boosters and organic veggie tortilla chips. Target plans to introduce a kids' cereal to the line this month and will also be launching this week some ready-to-eat meals with antibiotic-free chicken or grass-fed beef with organic vegetables.

In addition, the store is testing a much larger selection of bulk nuts, trail mixes, and grains in serve-yourself bins, which cut down on packaging. And the produce is laid out in wood-paneled receptacles and wicker barrels that aim to give it a fresh-from-the-farm look.

Naughton and his colleagues have tracked a 49 percent increase in the number of organic items at Target in the last year. Many of those have been from Target's private brands, which helps keeps the costs down for what can otherwise be pricey items, he said. But he added that he's found that Target often sells even brand-name organic items for a cheaper price than Whole Foods when comparing the exact same items.

One of the reasons Target can afford to do that, he said, is that the retailer gets good margins on its home goods and apparel.

"It allows them to be competitive on traffic-driving categories like food," he said. "It's a nice advantage they have compared to others."

Kavita Kumar • 612-673-4113