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Target’s Expansion Centers on Smaller Format Stores

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Target flexible format

For the rest of this year and next, Target only has eyes for smaller stores.

The discount retailer has plans to open 27 stores through next year, and only two will be larger format locations.

On Wednesday, Target opened one 21,000-square-foot location in Forest Hills, a neighborhood in the Queens borough of New York City. Another 19,000-square-foot location opened in Washington Square West in Philadelphia Tuesday.

So far, Target already has 10 stores that are 49,999 square feet or less (the retailer has 1,792 stores in the U.S.), and a shift to more petite stores in more urban areas brought Target’s average store size down for the first time to 133,700 square feet, the New York Post reported.

For the 14 small stores Target will open this year, the average size is just over 35,000 square feet. Locations for these littler formats include Hyde Park in Chicago, City Point in Brooklyn, New York, and Tribeca in Manhattan.

The smallest of the stores will be a 16,000 square foot location in Brookline, Massachusetts, which will have grab-and-go groceries, basic apparel, home goods (for apartments especially), tech and health and beauty, plus services like Target Mobile and Order Pick-up.

Target has been taking over real estate from ailing retailers like Barnes & Noble and OfficeMax for its small format stores and moving to capitalize on the urban consumer.

“We can get into great locations now that we have smaller prototypes,” Tony Roman, senior vice president Target and head of the greater New York market, told the Post.

The smaller stores, where some have said sales productivity could be as much as double that of Target’s traditional stores, are expected to provide positive growth prospects for the retailer.

For the first quarter 2016, Target reported sales down 5.4% to $16.2 billion as a 1.2% increase in comparable sales was offset by the sale of its pharmacy and clinical businesses.

“We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment,” Target chairman and CEO Brian Cornell said in a statement at the time.

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