MINNEAPOLIS, MN - On the heels of announcing 13 store closures nationwide due to falling profits, Target has also revealed that the company has been pursuing partnerships to help strengthen its weakening fresh food supply chain.
"There is an opportunity to use some partners who may be able to do things a little bit better," Chief Operating Officer John Mulligan explained in a recent interview with Reuters. He says that because Target's supply chain has evolved over time as it expanded into more fresh food options, the ending result was a less-than-efficient patchwork system. "I said to my team this looks like Frankenstein. We have made this thing out of a bunch of parts."
Mulligan added that Target has increased food sales by focusing on what the chain does best—"cheap chic." In fresh food, this means things like organic produce, fat-free yogurts, and other healthy food trends, he says, but added that the company's supply chain for fresh food isn't fully reliable in many parts of the country.
Mulligan declined to detail the company's exact plans to remedy the company’s supply issues, but Burt Flickinger, Managing Director of Retail Consultancy Strategic Resource Group, told Reuters that partnerships could mean billions of dollars for wholesalers, food distributors, and food and grocery manufacturers who have existing infrastructure to store and ship food products to Target stores.
Potential partners named by Flickinger are retail chain SuperValu Inc, North Carolina-based distributor MDI, and regional wholesale co-operatives like Affiliated Foods Midwest and URM Stores Inc.
Ultimately, Mulligan’s hope is to remain competitive with rivals like Wal-Mart and Amazon without having to maintain such a massive warehouse and distribution chain.
"We will not be building $200 million fulfillment centers all over the country," Mulligan explained. Target stores nationwide have some 8 to 9 billion items on store floors, in transit or in warehouses at any given time, he added. "The challenge of where you put inventory is going to be much more difficult in the future as we ship products from stores.”
Besides the potential supply chain changes in the future, Target has announced it will be closing 13 of its stores nationwide due to the stores’ falling profits. The Minneapolis-based retailer confirmed the closings Wednesday, saying, “the decision to close a Target store is not made lightly.”
The 13 closures include:
- Austin North East – Austin, TX
- Suncoast Pasco County – Odessa, FL
- Casa Grande, AZ
- Victorville, CA
- East Flint – Flint, MI
- Columbus Southwest – Columbus, OH
- Northridge – Milwaukee, WI
- Springfield, OH
- Ottumwa, IA
- Anderson, ID
- Dixie Highway – Louisville, KY
- New Ulm, MN
- Superior, WI
For more on Target’s potential fresh food deal as information comes in, stay tuned to AndNowUKnow.
