Why Target Is Getting Into Consumers’ Heads About Groceries

For a major retail chain, things have probably gone a bit off book when a substantial amount of the executive team’s time is spent talking about the bathrooms. Bathrooms are among the things in life that the following rule is almost always true of — if you are talking about it at all, something has probably gone notably awry.

There is some good news in this regard, as Target’s “bathroom problem” is a bit unique in that it is ideological, not physical.  It may not be ideal to have a religious nonprofit circulating a petition with 1.2 million signatures threatening to boycott your stores over a trans-inclusive bathroom policy; it is however an order of magnitude better than having a massive failing of the physical infrastructure in one’s bathrooms nationwide.

It is possible to take a principled stand on an ideological bathroom issue, as CEO Brian Cornell did on CNBC earlier this week.

And while we have no inside knowledge of how the executive team at Target feels about spending so much of their days pondering the mysteries of liberty and security as they relate to the restroom they offer their customers, we imagine we can make a pretty good guess in the family of “not good.”

If for no other reason, there are other things that the executive team at Target would clearly much, much rather being thinking about.

Things like groceries.

And not only is Target thinking about groceries — they are taking a unique approach to figuring out what they can do for their customers. Because more than their interest in their own take on groceries is an intense desire to know what their customers think.

And so they’ve undertaken an interesting, and rather old-school way of finding out. They’re asking. In person.

What Consumers Want – The Great Grocery Puzzle 

To say that groceries are “hot” these days, as retail writers are wont to do, is a little bit misleading. Groceries are hot in the sense that groceries have always been hot. Everyone has to eat, which means pretty much everyone has to buy them. It is a little silly to act as though buying groceries is some sort of interesting new fad among consumers.

The question for every merchant selling non-prepared food is how to connect customers to those groceries and drive the maximum amount of that sunk cost spend into their coffers, as opposed to the coffers of the ever-proliferating list of grocery competitors.

A list that is getting increasingly crowded and confusing by the day. There are delivery services that move to take the “going to the store” pain point out of grocery buying by charging you a fee to deliver groceries to you. That includes variations like Instacart that work with physical retailers like Whole Foods, or services like Peapod that are affiliated with stores (Ahold-owned Stop & Shop and Giant) but that actually run their grocery delivery operation out a warehouse system or the services like Amazon Fresh and Jet — also running off a warehouse system and are not tied to any physical stores.

And that’s not even scratching into all the variation on buy-online, pickup in-store that are flowing across the grocery retail ecosystem.

The good news for consumers is that the people who sell them their produce (and dairy, and dry goods, etc.) are incredibly concerned with making them feel comforted, convenienced and  satisfied they never want to shop everywhere else.

The bad news for retailer is that it can be hard to know which, if any, of these things are really what customers want.

There are various technological ways to help answer that question — and we’ve extensively covered the ways that physical retailers can adapt their front end, back end and even surveillance systems to build out the same kind of rich analytics data used to develop answers about customer desires. If you can track who enters, what they buy, how long they stay, how often they visit, one can undeniably go a long way to learning about customers’ wants and habits.

But, Target noted, what one will not get any insight into is what customers are thinking while they are doing all those very observable behaviors around their groceries. And so the Minneapolis retailer has embarked to find out that extra piece of information — not just what customers are doing when they grocery shop, but why they are doing it.

Learning By Asking 

Enter Seijen Takamura, the lead designer with the Food + Future coLab, a collaboration between Target, the design firm IDEO and the MIT Media Lab.

Takamura and team were tasked with a series of experiments that have been carried out in the field in various locations in the U.S. trying to learn how consumers react to what they experience in-store.

And we mean every experience, right down to how looking at the signs above the strawberries make customers feel.

In one experiment customers were presented with a sign that noted berries that had arrived that day with a cost of $2.99 a package. Different groups of the same type of berries were marked $.50 cheaper and one week older.

“Tell me how that influenced what you’re looking at, if at all?” Takamura asked.

“I didn’t really look at the date, to be honest,” she said. “I looked at the 50 cents off,” noted Emmy Schmidt, a working mom.

The big bet here is that knowing what makes customer choose what they do will help them better amp up their $20 billion grocery business.

“It’s already a sizeable book of business,” said Casey Carl, Target’s chief strategy and innovation officer. “We need to understand and look more effectively around corners at what’s coming, and figure out how to create opportunity in that.”

Other tests have involved using clear packaging on food items and listing ingredients on the front of the packaging, instead of the back.

That experiment had a weird result. Shoppers noted all the processed ingredients were more notable on the new packaging, but many also reported an “uncanny effect” of making the cheese balls look incredibly delicious.

Will this work?

Amy Koo, Kantar Retail’s Target analyst, is mixed on the subject, noting that Target has made big strides in grocery — and that the idea is interesting, but that it seems like one of many things Target is pursuing.

This, Koo notes, is problematic, as Target may be starting too many new plans without finishing off on old ones.

But then Target doesn’t have much in the way of time on its side, considering that grocery gets more competitive every day — and grocery is 25 percent of the bottom line. Which means, one way or another, Target needs to find a line into consumers’ minds — and a better way to serve their preferences.

Whether this will be it remains to be seen.