Target doesn’t need to be in a hurry to return new stores construction to pre-recession levels now that it has the Pfresh remodel program to keep it occupied through 2012 and beyond. By year end, Target expects to have remodeled roughly 340 stores to the Pfresh format, which will give it a total of 450 Pfresh stores. Next year, another 400 remodels are on tap for the Pfresh conversion process, and with that pace expected to continue Target will need all of 2013, 2014 and much of 2015 to complete the chain-wide remodeling program.
By the time the effort is complete, the company’s product mix is going to look very different than it does today, as food and other consumable products grow to account for an increasingly larger percentage of sales. This phenomenon is already taking place. At the end of the most recent fiscal year, the category of food and pet supplies had grown to represent 16% of sales of $65.4 billion compared with 13% of sales of $63.4 billion two year earlier. A similar situation exists with the category Target defines as household essentials. Sales in that category stood at 23% last year compared with 21% two years earlier.
Both categories are expected to be up even more sharply by the time Target reports its full-year results next spring as results from the surge of Pfresh remodels completed this year are included in the results along with the effect of increasing promotional activity in food and consumable categories that has seen those categories regularly among the top performers at Target.