Target Finally Lands in Manhattan

Discussion
Jul 28, 2010
Tom Ryan

By Tom Ryan

After a 13-year wait, Target has opened its first store in Manhattan
to packed crowds. The 174,000 square-foot store in East Harlem officially opened
on July 25.

Target had been eying the former factory site since the late nineties
but zoning, local business opposition, and other complications caused delays.
Given real estate costs, the store represents the largest investment in a single
project in Target’s history, said John Griffith, senior vice president of property
development, at a press preview last week. But according to the Minneapolis
Star Tribune,
he
quickly added: "And we’re expecting the best return, over time."

First-year
sales are projected at "north of $90 million" versus a
typical suburban store’s first-year output of about $25 million. A number of
its other nine locations in other New York boroughs already surpass $100 million.
Entering Manhattan is said to represent a breakthrough.

"It’s not about the baby boroughs," Faith Hope Consolo, chairman
of Prudential Douglas Elliman’s retail leasing division, told The Associated
Press.
"This is going to plant Target firmly in the urban market.
If you succeed here, there’s no market you can’t own."

Target has been
heralding its entry into Manhattan since turning a floating barge into a
temporary store on the Hudson River in 2002 followed by a comprehensive marketing
campaign, including billboards in Times Square. The store joins a Costco
and Best Buy at East River Plaza on East 117th Street, about a 15-minute
walk from the nearest subway. Locals are expected to make up the bulk of
shoppers but the store is also expected to draw residents from across the
city.

"My husband and I are serious Target fans," Lisa Haney, a Brooklynite,
told the Star Tribune. "We rent a car on weekends just to go to
the suburbs and go to Target. It’s great there’s finally one in the city."

Target
also said its planning smaller stores — 60,000 to 80,000 square-feet — in
Manhattan in the future, though the next one isn’t expected to open for at
least three years.

Overall, Target has been more aggressively targeting urban doors
than competitors, and it now has 10 in Chicago and 33 in Philadelphia. In all,
it has about 150 stores in cities and 50 more that have more than 100,000 people
within two miles, according to the AP.

Kmart actually has two stores
in Manhattan opened in the late nineties, but analysts believe the chic discounter
holds greater appeal to the city slicker.

"It’ll be the de facto price leader in this area," Eric Beder, an
analyst at Brean Murray Carret & Co., told the Star Tribune. "And,
let’s face it. New Yorkers are more cachet to Target than Kmart."

Discussion Questions: How significant is Target’s entry and early success
with its first Manhattan store? Does Target’s aggressive push into urban
areas provide it with a significant first-mover advantage?

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15 Comments on "Target Finally Lands in Manhattan"


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David Biernbaum
Guest
10 years 9 months ago

Target’s arrival in Manhattan (New York) is highly significant and will deliver amazing results for the retailer.

• Fantastic national media exposure.
• Competitive pricing on every day items and specialties will lure Manhattan consumers.
• Further upgrades the retailer’s image as a trendy retailer.
• Creates lots of new jobs.

Of course I would also have some basic concerns including the notion that consumers not in cars have limited capabilities to buy in large volume. But overall, I think Target will do it right and this is going to work out.

Roger Saunders
Guest
10 years 9 months ago

As long as Target can avoid the strong-arm tactics of politicos who are looking for zoning and union favoritism, and let this masterful marketer focus on the consumer, as they do so well, there will be winners galore in these urban operations. Target, Target shareholders, consumers, job growth, manufacturers and CPG concerns, new tax revenues for the community, improved blight in the community (factory to a shining store), etc.

Let the free market move forward, and amazing things happen! Sorry, got carried away, as I just reviewed a 31 year old clip of a Phil Donahue interview with Milton Friedman–hopefully, many of our urban politicos do a more focused performance in studying the likes of Friedman and Hayek…they’ll see growth in their communities.

Roy White
Guest
Roy White
10 years 9 months ago
The store is sharp and beautiful and the crowds of customers are obviously pleased with the store’s looks, shopability and merchandise mix. However, this is not really Target’s first store in the area. There’s one on the edge of the Bronx (on a piece of land, by the way, that was once part of Manhattan) that serves not only a Bronx neighborhood, but a Manhattan one too directly across a convenient bridge. And the Mount Vernon store (huge traffic there) abuts the New York City line. While I am on the subject, I do object to the “baby boroughs” quote. New York City’s outer boroughs are very vibrant, extremely urban, and give the city more diversity, excitement and “oomph” if you will, than Manhattan does. In addition, let’s face it, the new store on 116th Street next to the FDR is not in mid-town Manhattan, and it serves an uptown neighborhood that deserves and needs a store like Target. That neighborhood, FYI, is very similar to those that the Bronx and Mount Vernon stores serve.… Read more »
David Livingston
Guest
10 years 9 months ago

I’ve seen Target do very well in downtown Minneapolis and Chicago. Of course they will do well in New York. It’s shameful still that it took 13 years. Local municipalities need to step back and rubber stamp and green light big box development. It only hurts the local economies when big box retailers are held hostage by bureaucrats. I wouldn’t call a 13 year project an aggressive push into urban markets, but this is a significant start.

Gene Hoffman
Guest
Gene Hoffman
10 years 9 months ago

New York, New York, will be a wonderful town for Target. Target may be a bit late but they are ahead of Wal-Mart and they have become more aggressive in merchandising. The Target Turtle is starting to run with the Big Boy.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 9 months ago

To paraphrase Mr. Frank Sinatra, “if you can make it there, you can make it anywhere.” Big box stores like Target do not traditionally do well in urban settings, but as culture becomes increasingly homogenized, that is changing. Target’s apparent success in Manhattan is a great sign for big box retailing and another nail in the coffin of small, local boutique operations that have been hanging on in big cities and upscale suburbs.

Arthur Rosenberg
Guest
Arthur Rosenberg
10 years 9 months ago

I too found the comment about ‘baby boroughs’ strange, especially from a professional. These boroughs feature diverse complex neighborhoods that are among the most vibrant in the country.

As to the Brooklynite Target fans, why go to the trouble and considerable expense of renting a car just to visit a suburban Target? There have been Targets in Brooklyn for some time.

Ed Rosenbaum
Guest
10 years 9 months ago

As said previously, “If you can make it here, you can make it anywhere.” Target has made it “anywhere”; and now forcasts huge revenues from this single location, equal to almost four times a typical location outside New York.

Their marketing and advertising campaigns single them out as aggresive and “targeted” right on the local consumer. Target joins The Container Store, now with two NYC locations, as somewhat new arrivals, and changing the way Retailers are looking at the New York City market.

Build it and they will come is the new marching order. NYC is built, the retailers are coming; and following them are the consumers in droves.

Carol Spieckerman
Guest
10 years 9 months ago

It’s about time Target became legit in the Big Apple–it’s a match made in heaven for all of the reasons cited. And more…hanging a shingle in Gotham will give Target invaluable insights into urban markets that they can in turn leverage across the US. New York is a coveted urban template–Just ask Walgreens (Duane Reade)!

Gary Ostrager
Guest
Gary Ostrager
10 years 9 months ago

It’s all about the customer experience. Target will absolutely thrill the New York City shopper with its style, product array and pricing model. Shoppers will flock to Target, now that it has its doors open in NYC, and so will their spending habits. I expect Target to do a great job of branding and merchandising to keep the customer coming back for more of the same great things the organization has done in other urban markets. Welcome to New York City!

Adam Drake
Guest
Adam Drake
10 years 9 months ago

How important is this store to Target? In reality, not very. I think operating a store in Manhattan is overly romanticized (though I understand Manhattan is more romantic than Des Moines). Do you think the people who shop at the other 1600+ locations really care if they “make it in NY”?

To be a little more direct: How important is this store to Target? Well, at $100M in revenue it is 0.15% of sales.

Herb Sorensen
Guest
10 years 9 months ago

Let’s bear in mind that Walmart began as a small “country/small” town retailer in Arkansas. This is NOT a highly competitive market. But a great place to hone skills. Those skills are VERY relevant to big cities with highly competitive markets. Of course adaptation is necessary, but after blanketing the country, those adaptive skills have been honed, too. Go TARGET!!!

Doug Stephens
Guest
Doug Stephens
10 years 9 months ago

I see the move as the hood ornament of an urban strategy that will become increasingly vital to the survival of box retailers like Target, Wal-Mart and others.

The simple truth is that major cities are growing and most other places aren’t. In Canada for example, 33 major cities account for over 90 percent of all annual population growth and six of those more than double the average growth percentage of the remaining 27. The same sort of urban growth concentration is taking place in the major Southern, Western and North Eastern cities of the U.S.

Population growth in both countries is largely the result of immigration and immigrants move to cities. Couple this with an increased reliance on urban infrastructure by an aging domestic population and you have no choice but to open stores in the core.

So, to my mind, Target’s opening in Harlem isn’t so much a question of good strategy versus bad strategy as much as being part of the ONLY strategy.

Joel Warady
Guest
Joel Warady
10 years 9 months ago

For the past eight years, Target has dipped its toe in the waters of Manhattan with various temporary locations and pop-up stores. Opening their first permanent Manhattan store was a natural progression. Is it important? Only from the standpoint of the fact that having a store in the fashion, art, and financial capital of the US is a way of solidifying the fact that the chain is truly a national chain. Other than that, we shouldn’t make it a bigger deal than it is.

It is simply one mass retail store in the largest city in America. End of story!

Odonna Mathews
Guest
Odonna Mathews
10 years 9 months ago

The stakes in New York are high but Target usually delivers what consumers want in selection, value, variety and the overall shopping experience. Sounds like go to me.

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