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MINNEAPOLIS — Target Corp. has announced plans to accelerate its push into urban areas with smaller stores, saying that for the first time it will open more smaller stores than general merchandise stores this year.
Target Corp. has announced plans to accelerate its push into urban areas with smaller stores, saying that for the first time it will open more smaller stores than general merchandise stores this year.
The company plans to open nine smaller-format stores in 2015 and six big-box stores.
The move is central to growth plans being formulated by Brian Cornell, who was hired in August as Target’s chief executive officer to dig out of the hole created by a massive security breach and other woes that surfaced under previous CEO Gregg Steinhafel.
Enhancing Target’s digital operations is another of Cornell’s priorities. To that end, Target this month hired Mike McNamara, who has worked at British retail giant Tesco PLC for more than 15 years, to be its new chief information officer.
While at Tesco, McNamara introduced "scan-as-you-shop" capabilities and headed the chain’s technology office in India. He is also credited with helping modernize Tesco’s IT and global supply chain and launching an innovation lab.
McNamara succeeds Bob DeRodes, the IT veteran that Target brought in last year to restructure the company’s technology operation after cyberthieves accessed the company’s point-of-sale systems and stole personal and financial data on millions of customers.
So far, Target has moved cautiously away from its big-box stores in the suburbs to smaller outlets in more densely populated neighborhoods. Last year it opened 15 general merchandise stores and just one small-format store — a 20,000-square-foot TargetExpress near the University of Minnesota campus that is the first to operate under the TargetExpress banner.
The company opened its first midsize CityTarget store in 2012 and now has eight stores operating under that banner — three in Los Angeles; two in San Franciso; and one each in Seattle; Portland, Ore.; and Chicago.
The first CityTarget on the East Coast, near Boston’s Fenway Park, is scheduled to open this year. Another is planned for Brooklyn in 2016.
Target intends to open eight TargetExpress stores this year — three in San Francisco; one in St. Paul, Minn.; one in San Diego; one in Chicago; and two in Washington, D.C. TargetExpress stores are about one-sixth the size of Target’s general merchandise stores, and each is unique in its layout and merchandising mix.
"Our store growth looks different today than it did five years ago, driven by guests’ expectations for ease and personalization in their shopping experience," said Target executive vice president and chief stores officer Tina Tyler. "Smaller formats like TargetExpress and CityTarget offer customized assortments and services to meet the needs of guests who are increasingly moving into urban centers. In our general merchandise stores we’re embracing a test and learn philosophy, innovating with layouts and experiences and bringing digital and bricks-and-mortar together like never before."
Even with its new push, Target significantly lags the pace of experimentation with smaller formats set by rival Walmart, which opened about 240 smaller-format stores in its fiscal year through January along with 120 Supercenters. Company executives have said they expect that trend will hold for this year.
For Walmart and Target, the shift to smaller formats offers a chance to compete with dollar stores and others for urban shoppers, many of whom are more inclined to more-frequent shopping trips.
Some retail analysts expect small-box convenience stores will be among the fastest-growing banners over the next few years.
