As Loop store opens, Target will need to keep format fresh
BY SANDRA GUY Business Reporter email@example.com July 24, 2012 6:16PM
Updated: August 26, 2012 6:16AM
Target must step up its catering to shoppers and its ability to keep shelves stocked with basics such as milk, bread and eggs to ensure its new, smaller and high-trafficked CityTarget stores succeed, retail experts say.
That’s because the CityTarget stores are in urban areas with relatively high rents, rather than in suburban markets where real-estate prices are lower and store-ownership common, so they must rev up sales to cover the expenses, said Michael Keara, equity analyst at Morningstar.
Chicagoans will be among the first in the nation to experience the CityTarget store, since the Minneapolis-based retailer’s first three CityTargets — at 1 S. State St. in Chicago and in Los Angeles and Seattle — open Wednesday. Two more — one in San Francisco and a second store in Los Angeles — will open in October. In 2013, two more CityTargets will open — one in Portland, Ore., and a third in Los Angeles.
The urban stores pose another challenge in that they could take sales away from full-size stores nearby, such as Chicago’s CityTarget in the old Carson Pirie Scott building potentially competing with the Target store at Clark and Roosevelt in the South Loop, Keara said.
Matt Arnold, consumer analyst at Edward Jones in St. Louis, said the urban format is an experiment that requires Target to replenish food and everyday household supplies more quickly and train employees to handle a higher volume of shoppers than at a regular store. The average CityTarget is 80,000 to 100,000 square feet, compared with 125,000 to 135,000 for the average Target store without groceries. SuperTarget stores, which have full-line grocery departments, average 180,000 square feet.
Target is helped by its reputation as a cheap chic retailer with a bit more sophistication than its competitors, such as Walmart and dollar stores, which also are opening smaller urban formats, the experts said.
“Many urban shoppers don’t drive or don’t want to drive, and they can get products through the Internet and mobile media, so Target’s challenge is to make it easy for shoppers to get the products when and where they want without losing Target’s personality of value, convenience and right styling,” said Marshal Cohen, chief retail analyst at The NPD Group in Port Washington, N.Y.
The CityTarget in Chicago’s Loop aims to meet those expectations with features such as:
♦ Target’s bull’s-eye logo lit up and displayed from the iconic Louis Sullivan-designed rotunda window over the main store entrance.
♦ 10 percent of the store’s 89,000 square feet of selling space set aside for fresh foods — meat, dairy, fruits, vegetables. A “City Love” section offers Chicago-themed T-shirts, sports caps and 3D Viewmasters with “reels” of Brach’s Candy Factory, Chicago hot-dog stands and Motels of Lincoln Avenue, among other momentoes. Shoppers can access high-speed wireless Wi-Fi Internet connections. They may also access expanded selections of merchandise online by scanning QR codes in the baby, electronics and home departments, which are smaller than those in suburban stores.
♦ A pharmacy, “Destination Beauty” cosmetics department, limited-time-only designer clothing collections and healthy food chain Pret A Manger.