By Nicole Maestri

SAN FRANCISCO (Reuters) - Move over Italian dinnerware and Chinese accent armchairs. Target Corp <TGT.N> is making room in its stores for bulk-size packages of toilet paper to lure post-holiday shoppers.

Starting on January 3, Target, the No. 2 U.S. discount retailer, is introducing "The Great Save" in its 1,740 stores.

In the space where it typically sells seasonal merchandise, Target is setting up a "warehouse-club-like experience," taking aim at the success of clubs like Costco <COST.O> in drawing more store traffic with deals on necessities.

For the next seven weeks, Target's Great Save will feature items like a six-pack of bath towels for $19.99, children's T-shirts for $3, and 35-packs of Market Pantry bottled water for $3.59. Its stores typically carry 24-packs of the Market Pantry water for $3.99.

Warehouse clubs like Costco and Sam's Club, part of Wal-Mart Stores Inc <WMT.N>, charge members an annual fee to benefit from their discounts. Target said its Great Save will give shoppers warehouse club savings without the warehouse membership fees.

The move marks a switch from the past five years, when Target used temporary events in January and February, like its "Global Bazaar," to entice U.S. shoppers with African wood carvings or Asian accent tables.

For 2010, Target is betting shoppers will be more focused on buying necessities than new home furnishings. The company has acknowledged that its focus on trendy, but optional, merchandise had hampered its business.

"As we round the corner here post holiday, our guests are looking for ways to get back to everyday life, to stock up on the basics that they use all the time," Kathee Tesija, Target's executive vice president of merchandising, said in an interview.

Target's profits plunged in the recession as shoppers who once eagerly snapped up its home decor or fashionable clothing stuck to buying staples like food and medicine.

To get its business back on track, Target has turned up the volume on its value message, emphasizing the "Pay Less" side of its "Expect More. Pay Less" tagline. It is responding faster to price cuts from rivals and offering to match their prices.

Many of Target's shoppers overlap with those who shop in warehouse clubs, particularly Costco, Tesija said.

But Costco also thrives by stocking unexpected "treasure hunt" items like designer clothing or high-end jewelry, mixed in with its typical selection of supersized ketchup bottles or multi-packs of tissues.