Major retailer Walmart recently pulled the plug on its small-store format, and I am sure many varied factors went into that decision. As a result though, what can be gleaned from this action is that any retailer attempting a shift in concept, format, and size must realize that it is not simply opening a mini version of its traditional store. Instead, a small format store should be viewed as a whole new business, and it looks like Target is approaching their new, small-store concept this way.
The traditional Target store is
approximately 116,000 to 177,000 sq. ft., and location-wise, their focus has been the suburbs. This traditional store format has been successful, and Target plans on opening two more of their traditionally-sized stores over the next two years. But there is more to the story. Target has 21 store
openings planned for the next couple of years and only these aforementioned two will be in their traditional store format. The other 19 will be a smaller format store. Target is wisely opening smaller format stores to gain market share and introduce their great brand to a new customer.
Some retailers that have tried to go with a smaller footprint have introduced only one smaller sized concept. Not Target. They didn’t just pick a smaller size and go with it. Nope, they wisely introduced 2 concepts: TargetExpress sized at 20,000 sq. ft. or less, and CityTarget, which is sized at 80-160,000 sq. ft. Target will be flexible and opt to do a TargetExpress or CityTarget depending on the trade area and site.
Target’s wise customized approach is not limited to store size. They will also deploy a “localized assortment,” catering the merchandise mix to the store. With this customized mindset, I expect TargetExpress and CityTarget to be highly successful. A store customized to the area will be a winner and huge opportunity for future growth for Target. I think Target will find that its unique neighborhood store will be better than a faceless bigbox.