Dollars & Sense

Target to experiment with small store

Updated: 2014-01-23T17:50:54Z

Minneapolis Star Tribune

As people move back to cities from the suburbs, Target Corp. is experimenting with a relatively tiny store in Minneapolis that will provide consumers with a “quick-trip experience.”

The new Minneapolis store, to be called TargetExpress, will be even smaller than the CityTarget stores the retailer began introducing more than two years ago.

The first TargetExpress store, in a building under construction near the University of Minnesota, will test the concept of a store that is 20,000 square feet. That’s a fraction the size of Target’s big-box stores, which are 125,000 to 180,000 square feet, and much smaller than even its CityTarget stores, which are 60,000 to 100,000 square feet.

“This is an exciting opportunity to test and learn as we continue exploring new ways to meet our guests’ needs,” John Griffith, executive vice president of property development, said in a statement posted on the company’s blog Friday.

The store will open July 27 on the ground floor of a new apartment complex called the Marshall. The site used to be occupied by the University Technology Center and, before that, was the location of Marshall-University High School, which was built in 1924 and closed in 1982.

The TargetExpress store, which will open just as students begin arriving for fall semester, will offer groceries, pharmacy products, basic clothing, home decorating products and electronics.

The move could put Target into more direct competition with retailers like Walgreens and CVS that scaled up from their beginnings as drugstores, as well as with mom-and-pop stores in neighborhoods around the country. Wal-Mart Stores Inc., the only U.S.-based retailer larger than Target, has said it will begin experimenting with several small-sized stores this spring and has plans to open several hundred in the next three years.

“The test will help us learn more in smaller-store formats,” Target spokeswoman Sarah Van Nevel said. “The retail environment is changing quickly, and we’re evolving.”

The smaller stores are envisioned as a “quick-trip experience” because of their limited selection.

The stores would allow the retailer to open more locations in dense urban markets, where larger store spaces are hard to find. In addition, Target is making a bid to attract younger shoppers who tend to prefer cities over suburbs.

“Virtually all retailers are testing new store footprints right now,” said Minnetonka, Minn., retail analyst Stan Pohmer. “It’s because consumer demographics are constantly changing. For example, there is an exodus from suburbia to the cities again, and a large-footprint store might not work in a city because there’s not enough land available. This is not to say the present big-box store model is bad, but that retailers must change as the consumer does.”

Target didn’t offer any details about how many TargetExpress stores it plans to open, or what its eventual mix of big-box, CityTarget and TargetExpress stores might be. Target has 1,797 stores in the U.S. and 124 stores in Canada. Eight of the U.S. stores are CityTargets; the rest are conventional, large Target stores.

While the future of small-format stores isn’t clear, Pohmer said the development is “something very positive.”

“They’re testing new strategies,” he said. “I expect you'll see everything from a 20,000-square-foot to a 50,000-square-foot TargetExpress store.”

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