TARGET TESTING DOLLAR MERCHANDISE 2004-03-15 (2)

DAN ALAIMO

MINNEAPOLIS -- Target Corp. began testing dollar sections last month. "The 1 Spot" sections are in the front of about 125 of its 1,225 stores, according to a media report.

For example, a store in Rocky River, Ohio, put the dollar products into a comparatively small seasonal area near the entrance as soon as Valentine's Day goods were removed, SN found in store visits. A significant part of the offering is housewares items, such as spatulas, serving spoons, ladles, cutting boards and kitchen towels.

A Target spokesperson would not comment on the initiative.

"It's smart that Target has perhaps recognized some of those GM categories or even some center store grocery categories that have been impacted by dollar stores, and try to offer that to their customer and see if they stop that erosion," said Bill Mansfield, a nonfood supermarket executive formerly affiliated with Tom Thumb, Harris Teeter and, most recently, Marsh.

"The significance of Target rolling out dollar sections is yet another major retailer acknowledging that dollar stores and dollar store merchandise is very compelling to the consumer," said Neil Stern, retail consultant, McMillan/Doolittle, Chicago.

The "jury is out" on how well dollar store merchandise is going to work within conventional mass retail stores and supermarkets, Stern said. "While it works for dollar stores, they have a fairly complex formula to make sure they keep their costs down low enough to be viable selling that product. When other retailers add it into their mix, it doesn't always have the same results."

The Rocky River store visited by SN carries a smaller selection of dollar goods than found in many supermarket dollar sections -- or in Wal-Mart stores, some of which have store-within-a-store "Pennies-n-Cents" departments. Among the other dollar products carried by Target are Eveready heavy-duty batteries, health and beauty care items like bath and body products, plastic containers, and baby bottles and pacifiers. Seasonal Easter goods are on an endcap, and eight feet are dedicated to toys.