Prime retail space is at a premium in urban locations and finding enough space for the typical big box is hard to find. That's why Target is considering the development of a smaller box format to break into more locations inside cities.
"We know that consumers in dense urban areas love Target," Gregg Steinhafel, chairman and chief executive officer of the chain, told Bloomberg. "We have to work harder at trying to get a smaller Target in those areas."
While Mr. Steinhafel did not say any smaller stores were in the works, he did indicate that locations in places such as Brooklyn, NY had shown the chain how it could successfully operate units well below the 128,000 square-feet size of its typical general merchandise stores.
Target plans about 12 new stores next year and more in the years that follow, according to Doug Scovanner, chief financial officer for the chain.
"The constraint in 2011 and 2012 is the availability of suitable sites," Mr. Scovanner told Bloomberg. He also said the company would like to return to historic levels of store openings of 100 units a year if opportunities present themselves.
"We have the capital to be able to do that and we have the appetite to do that, but the availability's not there," he said.
Target also announced it will expand its PFresh concept to 350 more locations over the 108 where it is currently testing fresh foods in general merchandise stores. PFresh stores carry between 50 and 200 percent more food products than traditional Targets in roughly 1,500 square-foot departments.
Discussion Questions: What do you think of Target's general expansion strategy? Do you see urban locations as a path to success? What about its PFresh test?