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Increased efficiency coming to middle America and New York

Target’s ability to replenish stores across a large swath of the central United States is poised to improve in the next two years as the company gains much needed new distribution capacity in Texas and Ohio.

Target now offers fresh food in roughly 1,000 of its discount stores nationwide that feature the PFresh format in addition to 251 SuperTarget stores, yet only four of its 37 distribution centers are dedicated to fresh food. The food facilities are located in Cedar Falls, Iowa, Phoenix, Ariz, Lake City, Fla., and Fort Worth, Texas. The first of the two new facilities is scheduled to open in the spring of 2013 in Denton, Texas followed by a second 450,000-sq.-ft. facility capable of serving the fresh, refrigerated and frozen product needs of 350 stores the following year in West Jefferson, Ohio.

By the time the additional distribution capacity comes on line it will be sorely needed, assuming of course that Target’s limited offering of fresh foods continue to resonate with shoppers who visits stores more regularly. They won’t take kindly to poor in-stock levels, especially if Target relies on sharp prices on food and consumables to drive trip frequency.

Target has added fresh foods to more than 800 general merchandise stores nationwide over the last three years, and by the end of 2012 the expanded fresh food layout will be in about 1,100 stores or about 60 percent of all store locations. The assortment shift is evident in the company’s financial results. Last year, the category defined as food and pet supplies accounted for 19% of annual sales of $69.9 billion compared with 16% of sales of $64.5 billion two years earlier. The penetration rate of food is sure to climb higher in the years ahead as hundreds more stores are due for the PFresh treatment and improved distribution capacity allows the company to more effectively service stores that have been converted to the fresh food format.

The facility in Denton, Texas, just north of the Dallas Fort Worth area, will serve stores in Texas, Arkansas, Louisiana, Missouri, Mississippi, Oklahoma and Tennessee. The new facility in Ohio will serve stores in Illinois, Indiana, Kentucky, Michigan, New York, North Carolina, Pennsylvania, Virginia and West Virginia.

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