Target could outsource grocery

Target (NYSE:TGT) has been revamping its grocery business and is seriously considering enlisting a third party to help solve supply chain issues.

"There is an opportunity to use some partners who may be able to do things a little bit better," COO John Mulligan told Reuters. Target's supply chain, having expanded over time, is now a patchwork system and not fully reliable. "I said to my team this looks like Frankenstein. We have made this thing out of a bunch of parts."

Target has increased its assortment of fresh foods and recently put suppliers on notice that it would be paring back SKUs of packaged goods to increase its assortment of healthy items. But the retailer's supply chain is not up to the task of getting fresher products to stores, at least in some parts of the country.

Supply chain issues have plagued Target at various points in its history and were partially to blame for the retailers failed expansion into Canada. More recently there have been reports of empty shelves, specifically in grocery. Target has pushed a planned revamp of its grocery department to 2017, while it works out some of these issues.

Target has also struggled to execute in grocery. The chain reluctantly added its first refrigerated items and created a small selection of pantry items in the 1990s. Under the leadership of then CEO Bob Ulrich, Target developed its supercenter format and the Archer Farms and Market Pantry private labels.

The retailer later unveiled its P Fresh project to add more produce and fresh foods to stores. Today, CEO Brian Cornell is hoping the department will play a critical role in the chain's efforts to better differentiate assortment by offering unique, healthy items, including organics.

Getting the supply chain in order is key. Target is reportedly considering outsourcing the task to Supervalu, the very Minneapolis-based distributor that supplied grocery goods to those first pantry departments.

For more:
-Read this Reuters article

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