Target’s expansion into cities may mean more smaller stores
Target executives are starting to think small.
With 1,790 stores spread across the country and sales growth in each of the last two years at under 2 percent, the discounter is accelerating plans to roll out more petite, urban stores.
With 20 smaller stores already open, the Minneapolis-based chain expects to roll out 14 more this year — including one in the New York City neighborhood of Forest Hills, Queens, which will open on Wednesday.
The store is 21,000 square feet.
There will be only one large-format store opened in 2016.
As a result, the average size of a Target store fell last year — to 133,700 square feet — for probably the first time in its history.
The store in Forest Hills, along a busy commercial strip, opened in a space previously occupied by a Barnes & Noble.
Target is looking beyond its core customers in the burbs and scooping up attractive real estate abandoned by other struggling retailers like grocers, Barnes & Noble and OfficeMax, a Target rep said.
“We can get into great locations now that we have smaller prototypes,” said Tony Roman, senior vice president of Target and head of the greater New York market area.
The Forest Hills store, for example, will carry more kosher food to cater to the large Jewish population in the neighborhood as well as apparel meant to appeal to local sports fans.
In the fall, Target will open smaller stores in Tribeca in Manhattan, downtown Brooklyn, and Elmont, Queens, as well as elsewhere in Long Island and New Jersey.
Target’s first-quarter 2016 sales decreased 5.4 percent, to $16.2 billion, from $17.1 billion last year, and same-store sales rose just 1.2 percent.
“Sales productivity levels are double those of traditional stores and the product mix is more attractive,” said Morningstar analyst Ken Perkins in a research note. “We are optimistic about the growth prospects of Target’s urban and flex stores.”
Target’s shares, which were unchanged on Tuesday at $73.95, are off 12.2 percent over the past year.
The S&P 500 is up 1.7 percent over the same period, putting more pressure on execs to come up with a plan to reignite growth.