Target taps smaller stores to grow and to handle e-commerce orders
CEO Brian Cornell says flexible-format stores offer more ways for Target to expand, especially in downtown areas.
Cornell envisions eventually opening hundreds of smaller “flex-format” stores that could be a major part of Target’s future omnichannel growth, he told reporters this week during the company’s fall national meeting at its Minneapolis headquarters. Target is No. 22 in the Internet Retailer 2016 Top 500 Guide.
Target has opened 23 smaller stores in major cities like Chicago and Philadelphia and has plans to add nine more this year and at least 16 in 2017. Typically taking up less than 50,000 square feet, the smaller stores create pickup points for online orders, helping Target compete with Amazon.com Inc. (No. 1), and enable the company to expand into downtown areas where a big-box footprint isn’t possible.
The stores don’t have the same product selection as a typical Target and are more targeted at the demographics of a specific market. For example, the retailer’s store in New York’s Tribeca neighborhood, opening next month, will have a focus on baby and kids merchandise to meet the needs of the area’s plentiful family population, Cornell said. That’s “unlike our store at the University of Maryland, where there is very little baby, not a lot of toys, and a big focus on beauty and apparel,” he said.
Rival Wal-Mart Stores Inc. (No. 4) abandoned a strategy of opening smaller stores earlier this year, opting instead to focus its attention on its supercenters and grocery-store-sized Neighborhood Markets. Unlike Target, many of Wal-Mart’s smaller stores were in rural areas.
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