• Wall Street Journal (subscription only), Tuesday, May 12, 2009 10:30 AM

Target is transforming a corner of a hundred of its discount department stores into mini-groceries stores that carry a narrow selection of products from 90% of the food categories found in a larger grocery store, Ann Zimmerman reports. It may eventually add mini-groceries to most of its 1,300 outlets as the key to its strategy to reverse declining sales.

The retailer seems to be moving closer to the Wal-Mart mold of selling more food and emphasizing low prices. It also is revamping its adverting to focus on bargains. CEO Gregg Steinhafel, however, says he has no wish to try to be like Wal-Mart, which he characterizes as "a grocer that happens to also sell general merchandise."

The new mini-groceries inside existing discount department stores have increased food sales 50% at test stores, and lifted sales of other items as well, Steinhafel says. Investor activist William Ackman has chided Target for failing to cope with the economic downturn. "Target is not Gucci," he says. "It should be a business that does well even in tough economic times."

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