TARGET CONSOLIDATING SUPPLY BUSINESS

DAVID GHITELMAN

MINNEAPOLIS -- Target Corp. here is continuing to consolidate its supply business, expanding its contracts with Fleming, Dallas, and Supervalu here.

Fleming said last week it has reached a $300 million annual agreement with Target that will expand the wholesaler's sales to conventional Target stores nationally -- approximately 1,000 units in 46 states.

Scheduled to begin in October, the deal will make Fleming the principal supplier of candy, cookies and convenience and frozen foods to Target stores. A Fleming spokesman told SN the new agreement does not affect Fleming's supply relationship with SuperTarget locations, which the company currently supplies with some grocery, frozen and perishable products.

The Fleming spokesman declined to say how much of the new arrangement with Target represents new business.

Most of the new business comes at the expense of smaller, regional distributors, a Target spokeswoman said.

Approximately $10 million of Fleming's new sales to conventional Targets -- mostly of frozen and refrigerated foods -- will replace items the mass retailer used to buy from Supervalu, a Supervalu spokeswoman told SN.

However, Supervalu last week revealed additional details about its $400 million annual supply agreement with SuperTarget stores, originally announced in May. Supervalu said the deal is scheduled to begin in August, and by the end of the year it will supply grocery, meat, deli, frozen, dairy, bakery and produce to 67 SuperTarget stores in 15 states. The company said that as of June 15, it supplied 37 SuperTargets in 10 states.

The Target spokeswoman said consolidating supply agreements is not a new strategy for Target.

"We are continuing to consolidate and working with both Fleming and Supervalu," she said. "Both bring with them different skills, different networks and different specialties. Also, it is always helpful to have two distribution options available to us."