Target experiments with in-store vertical farms

Dive Brief:

As part of its food innovation efforts, Target is researching vertical farming, an agricultural technique to grow plants and vegetables indoors in climatized conditions, and says food from the in-store gardens could go on sale as early as next spring, Business Insider reports.
The effort is a key part of growing the retailer's $20 billion food business, Target's Chief Strategy and Innovation Officer Casey Carl told Business Insider. “We need to be able to see more effectively around corners in terms of where is the overall food and agriculture industries going domestically and globally,” he said.
Last year Target announced a collaboration with the Massachusetts Institute of Technology and design firm IDEO to explore urban farming and other food-related research.

Dive Insight:

Target's investments in grocery innovation could be a huge differentiator in a fiercely competitive grocery environment, which includes Wal-Mart (which gets more than half its revenue from grocery) and a host of full-line grocery stores.

That would be especially so if Target and its research and innovation partners can grow tomatoes and other foods from rare seeds saved in various “seed banks” around the world. Those plants have the potential to yield varieties not seen or tasted in quite a long time, which could set Target's produce apart from that grown by agribusiness.

Grocery has been an especially tough area for Target, showing slim margins and presenting tricky loss prevention challenges. Earlier this year the retailer took steps to head off problems with perishable losses higher than the industry average: Target has found it particularly difficult to stave off spoilage because customers aren't coming in often enough for perishable foods.

In response, Target announced it is assembling dedicated grocery teams, ranging from 10 to 60 employees, to work exclusively in grocery sections and receive special training on packaged and fresh food. There are also plans to increase grocery promotions and marketing efforts.

Target has already rolled out the revamped grocery effort in about 450 stores, with another 150 to follow by October. Target's consistent emphasis on fresh and organic foods may help its smaller TargetExpress stores, which contain a large amount of grocery offerings with the hope that nearby customers will use them as a grab-and-go destination for a quick snack or dinner.