Target Looks to Go Downtown
Walmart isn’t the only big box retailer looking to develop a smaller box alternative. Target, while not going to the extreme of a 15,000 square-foot model a la Walmart Express, is looking at urban centers to open its own smaller City store concept.
So far the chain has plans to open stores in Chicago, Los Angeles, San Francisco and Seattle, and, according to the Denver Post, Target is scouting Mile High locations, as well.
As a piece on the Bloomberg Businessweek site points out, consumers in cities have been forced to travel out of town — aside from the occasional pop-up store — to shop in the cheap chic nirvana that is Target.
"It’s like we’ve been dating long distance," John Griffith, executive vice president at Target, told Businessweek. "Now we’re going to be right in their backyard."
The City concept is currently 80,000 to 100,000 square-feet compared to the 135,000 square-feet of a typical Target store and may go even smaller as space and zoning restrictions apply.
Regardless of the final size, City Target will be different than suburban stores. For one, space requires more tightly edited merchandise selections and smaller sizes. City stores will also be part of Target’s P-fresh initiative, offering fresh foods with the goal of driving more frequent shopper visits. Prices will also be higher to help pay higher rents that come with in-town locations.
Leon Nicholas of Kantar Research believes that Target may be challenged to keep shelves stocked in City stores. Of the retailer, Mr. Nicholas told Businessweek, "Its weak spot has always been operations."
Target plans to have 10 City stores open by the end of 2013 and will wait to see what it needs to do to make them profitable before building any others.
According to the Denver Post, that city may be the location of one of the first 10 Target City stores.
Jim Kirchheimer, senior vice president at the Downtown Denver Partnership, told the Post, "We’ve been talking, and the interest is mutual. We’d love to have a retailer of the caliber of Target in downtown Denver."
"I think a downtown Target store would be extremely successful," retail broker Stuart Zall of the Zall Co, told the Post. "It would fill a void that exists. With the residential densities that downtown now has, and combine that with convention business and tourism, a Target store would have mass appeal."
- Target’s City Ambitions – Bloomberg Businessweek
- Target looking at downtown Denver sites for urban store – The Denver Post
Discussion Questions: What do you see as the challenges and opportunities facing Target as it opens City locations? What cities, other than those mentioned, do you think make the most sense for Target City locations?