Target to Tap Outside Company on Storing Grocery Stock

Target Corp is planning to hire outside companies to help store fresh food supply, which has been having problems with shortage of shelves.

Reuters reported that its Chief Operating Officer John Mulligan said that they saw an opportunity to work with partners who have the potential to do things better. As the supply chain expanded, so did the products it offers. Now, they include fresh fish in their inventory. Mulligan told his team that it is as if they have created Frankenstein, making their business out of various parts. He said that the company increased its food sales by offering their food products at a price that is as affordable as its other offerings, like its housewares and clothing. They focused that strategy especially on organics and healthier foods.

"There is an opportunity to use some partners who may be able to do things a little bit better," Chief Operating Officer John Mulligan said in a recent interview.

According to the Business Journal, Strategic Resource Group managing director of retail consultancy Burt Flickinger said if the Minneapolis-based retailer pushes through with the outside partnership to handle its food storage, wholesalers, food manufacturers, and food distributors would earn billions of dollars more. One of the candidates for this partnership could be Supervalu Inc, which is based in Eden Prairie. It owns retail chains that act as a distributor for independent grocers. This company has worked with Target in 2007.

The Consumerist writes that for the past ten years, Target has added in their inventory more food products, which is an area where they plan to expand. That created the patchwork supply chain that prompted the company to consider partnering up with outside companies for storage. It has already partnered with Instacart to help them deliver their products, and Curbside for pickup. As it plans to expand nationwide, it definitely need to do something about stocking its items.

According to Mulligan, they are working on ultimately leveling with their competitors, such as Wal-Mart and Amazon. They want to achieve this without going into capital-intensive strategies, like building $200 million worth centers all over America.