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Target is facing a few coalescing headwinds as of late: a Q1 sales slump of 3%, falling foot traffic, and a bout of prolonged bad PR over its perceived backtracking related to diversity, equity, and inclusion (DEI) efforts, as Modern Retail's Mitchell Parton outlined.
At least one prong of the response: a "small town charm offensive" being launched by the retailer. According to the news outlet, Target's list of store openings includes a number of full-size locations in areas where it hasn’t been competitive in the past — part of an effort to expand its footprint among new customers or those who have previously been underserved.
"Target’s list of upcoming store openings on its website — which doesn’t specify when each store will open — includes a range of towns quite far from dense areas, from Chubbuck, Idaho, to Indian Land, South Carolina. For some, it’s their first Target store," Parton wrote.
New Target Openings Lean Into Stores-as-a-Hub Shipping Model, Both Urban and Rural
Target has big plans for expansion. It is slated to launch more than 300 new stores over the course of the next decade, mostly full-size (meaning more than 100,000 square feet), as part of its broader plan to utilize these locations for shipping and delivery purposes. Ship-to-store has increased in importance over the course of the past few years, not only in terms of personal pickup for items purchased online, but also in terms of local delivery options, enhancing customer options when it comes to how they'd like products delivered.
Modern Retail quoted Target COO Michael Fiddelke from the company's most recent earnings call, held in March, as saying that three-quarters of Americans live within 10 miles of a Target store at this point in time— a figure which will almost certainly increase as store count increases.
"We call that a good base on which to build," Fiddelke said.
Target's move may come in response to dual threats poses by Walmart — which already boasts of having 90% of the U.S. population residing within 10 miles of a Walmart or Sam's Club — as well as by Amazon, which announced in April of this year that it would be investing $4 billion to improve its rural delivery network.
And despite the difficulties endured by the red-and-white brand, it appears that Americans remain interested in buying from Target.
"In the age where you can order nearly everything from Amazon, many of the mayors and local business owners interviewed by Modern Retail emphasized that they feel like their residents see the arrival of Target as a big, red status symbol," Parton wrote.
"Many, like [Southern Pines, North Carolina, resident Taylor] Clement, recall stories of people in their communities asking repeatedly when they would be getting a Target," he continued.
Target Could Face Local Pushback From Small Businesses as It Expands
The move into more rural communities could be fraught, however, similar to the stories outlined by 2005 indie hit "Walmart: The High Cost of Low Price," a film which (in part) delineated situations in which small town retailers struggled, or were forced to close, when their community's businesses were forced to go head-to-head with Walmart. That sentiment may have evolved or evaporated, at least somewhat, in the interim, but the eventual outcome remains unclear.
Again calling on the town of Southern Pines (population 16,728 as of 2023), Parton noted that opinions were mixed on Target's move into the town, as it opened a 147,000-square-foot store, one with added warehouse capacity for last-mile delivery. Parton cited Kimberly Daniels Taws, manager of The Country Bookshop in downtown Southern Pines, as saying that her bookstore had seen a reduced number of transactions, but an increase in revenue, following Target's entry into the market.
Taws attributed much of the bookstore's resilience, however, to a renewed focus on pop-up events to build awareness and customer loyalty, with a particular zeroing in on catering to social interactions, which the big-box retailer was unlikely to emulate.
“Target’s not going to go pop up at a brewery or at the cider house,” Taws said. “It’s an opportunity to get innovative, because we have these community connections that Target doesn’t have.”
Residents in Quincy, Illinois (2023 population: 38,803), and South Lake Tahoe, California (2023 population: 21,079), generally responded positively when queried by Modern Retail, praising Target for attracting other retailers — such as Ollie’s Bargain Outlet, Dunham’s Sports, and R.P. Lumber — and for drawing shoppers from neighboring smaller communities.