Why are Target’s small stores much more productive than its big boxes?

Target is one of those retailers whose name is synonymous with huge, suburban big box stores. But its recent attempts at small, urban formats are proving to be quite a successful endeavor. In fact, the success of this concept raises the question: Would Target be better served focusing almost entirely on developing smaller stores? Target's small stores have demonstrated productivity double that of larger locations and have shown double-digit comp growth, according to Neil Saunders, managing director of GlobalData Retail, in a MarketWatch article. The chain plans to open more than 100 small-format stores in the next three years. The success of the small formats come at a time when Target has been struggling to redefine its identity. The retailer has made numerous efforts to clarify its value proposition and brand image in recent years. In 2015, Target launched an initiative focused around four key areas of business — style, baby, kids and wellness — as part of a "transformation roadmap." Perhaps the most notable changes to its mainline stores thus far have been in the area of wellness. Target announced the replacement of some sugary snacks at the checkout with granola bars and has experimented with a "connected health" section in some stores to capitalize on the emerging trend of IoT fitness trackers. With 100 new stores on the horizon, Target appears wise to the value of continued investment in their new, smaller stores. But management has also been putting effort into finding a new look and feel for its big box stores. Last year, Target began piloting themed, department-store style displays at the entrances of some of its stores. And earlier this year, it announced the impending debut of a split-format big box store. The first of the split-format stores is slated to open in October in a Houston suburb, according to the Minneapolis/St. Paul Business Journal. The concept is 124,000-square-feet and features two entrances: one takes customers to the section of the store focused on lifestyle shopping and apparel; the other is focused on groceries and quick trips.

• Target's small-format store are turning into a big win for the retailer – MarketWatch
• Will Target find its identity with a department store layout? – RetailWire
• Target sells 'connected health' – RetailWire
• Will Target take NYC by going small and flexible? – RetailWire
• Target unveils design for split-personality store concept (slideshow) – Minneapolis/St. Paul Business Journal