NEW YORK — Target has big plans to bring in new customers — and it plans to do it by thinking small.
Or, at least, smaller. Target is pushing beyond the spacious suburbs into congested big cities and near college campuses, with the hope that tinier, more curated stores will help boost flagging sales.
While the big-box retailer’s typical location spans at least 120,000 square feet, each of the four new locations opening Wednesday will be considerably smaller, including a 45,000-square-foot storefront in Manhattan’s trendy Tribeca neighborhood.
The so-called “flexible format’’ is a key aspect of the Minneapolis-based retailer’s effort to better compete in an environment where shopping centers are struggling and Amazon is dominating online sales.
“This allows us to get into those dense neighborhoods, such as Manhattan, where we couldn’t put a large typical store,’’ says Tony Roman, Target senior group vice president. “It gives us more flexibility.’’
The upbeat new direction comes at a difficult time for traditional mass merchandisers. Target has had to make dramatic cuts in the wake of faltering sales. Its second-quarter earnings plunged 9.7% to $680 million. At the same time, the company lowered its same-store sales estimate to a range from flat to minus 2% for both the third and fourth quarters. In March 2015, it said it would cut another 1,700 positions. Three months later, it sold its pharmacy business to CVS for $1.9 billion.
Target targets New Yorkers with smaller store
The new smaller-format stores are a way of reaching customers who might otherwise have trouble becoming Target stalwarts. Of the 15 new stores Target is opening this year, 14 will be the smaller, more curated models.
The Tribeca store features several hallmarks of Target’s overall strategy to become a one-stop shop for customers, including a section where shoppers can buy fresh, organic groceries, and an emphasis on merchandise categories such as wellness and fashion.
But each of the smaller stores also is designed to cater to the tastes and needs of the specific neighborhood where it is located. The walls of the Tribeca store are decorated with a graffiti-like mural that was drawn with a felt-tip marker.
In a dense section of Manhattan where people rely on the subway and taxis to get around, there is no automotive section, unlike many of Target’s larger suburban locations. (Lack of parking, in fact, is one of the store's bigger challenges.) And in a neighborhood full of professionals and young couples with babies, there are plenty of baby strollers, and smaller furniture that would better fit into tiny apartments.
“A traditional Target store would have an automotive department and here in Tribeca we know people aren’t driving,’’ Roman said. He added the company hopes the more tailored experience of the smaller, brick-and-mortar stores will entice people to actually come through the doors rather than simply shopping online. “We want our guests to shop (online) at Target.com,’’ he says, “but you can’t beat the in-store experience.’’
There’s a grab-and-go food section for businesspeople running out of the office on their lunch hours, and a section emphasizing headphones, earbuds and other wearable technology popular with neighborhood passersby. The store also features a sleek Chobani café, the yogurt maker's second, where diners can order salads, fresh drinks and breakfast bowls that feature yogurt.
Target is not abandoning the construction of large stores. The chain is spending $1 billion this year to remodel or build stores, including the addition of conveniences like self-checkout at various locations.
Besides Tribeca, the three opening Wednesday are in Philadelphia; Cupertino, Calif.; and State College, Pa. Those new stores will bring the number of smaller format storefronts to 27. The company will have 1,799 stores across the U.S., including the new locations.