All about balance in 2010

After a year that saw Target fine tune how it executes against its core brand promise of “expect more, pay less,” the company is rolling forward with a plan designed to blend an increased emphasis on low-priced consumables with an even stronger commitment to designer offerings. Both are top priorities for a company whose growth is dependent on how successfully it can differentiate itself from Walmart.

While the differences between the two companies have tended to blur in recent years, especially in newer Walmart stores, Target still reigns supreme when it comes to store experience, as is evident in the company’s new PFresh stores. That is the name the company gave to a concept that features a dramatically expanded assortment of food in addition to upgrades in such departments as beauty, shoes, pharmacy, electronics and home. Target showcased these changes and others last week when it hosted a meeting for financial analysts in Philadelphia where it has already converted 30 of its stores to PFresh.

Because the concept is working so well, Target in the coming fiscal year plans a dramatic shift of its capital budget to store remodeling efforts rather than new construction. A total of 340 stores are due to be remodeled to the PFresh concept at a cost between $2 million and $4 million. The company said it will spend a total of $1 billion on remodeling compared with the more typical annual budget of $400 million. Only 10 new stores are planned for the coming year, and that figure could remain stagnant in 2011 and beyond, as it was clear from the meeting that Target is committed to the PFresh remodeling program, as the addition of food and consumables has enormous traffic-generating benefits, which then expose more consumers more often to the retailer’s discretionary product offering, which is being infused with new designer offerings and upgraded presentations.