Photo: Target
Target CEO Brian Cornell sees big opportunities for the chain to grow by moving into densely populated urban areas and college towns. That’s why the company is focusing on opening smaller stores that can work within limited real estate spaces in places around the country that fit that bill.
To be sure, Target’s smaller stores are not of the cookie cutter variety. The chain, which refers to the units as “flexible format” stores, has some that are similar in size to convenience operations, while others are more in line with traditional grocery stores. This year, Target has opened 30 of these stores, including one in Cupertino, CA (21,000-square-feet) and another in Manhattan’s Tribeca neighborhood (45,000-square-feet).
Speaking earlier this week on his company’s third quarter earnings call with analysts, Mr. Cornell said the smaller stores are proving successful because each has customized its “assortment and operations” to meet the characteristics of the neighborhoods they serve.
“Based on their performance, we are increasingly confident and the opportunity for Target to profitably operate hundreds of urban and flex format stores over time, reaching new neighborhoods where consumers have a strong affinity for our brand,” said Mr. Cornell.
In answer to an analyst’s question, Target’s CEO acknowledged that running smaller stores is different than operating its larger 100,000-square-foot plus locations.
“We're really focused on making sure we build the back end capabilities, in supply chain, in assortment management, the in-store operating capabilities it takes to run these smaller stores,” he said (via Seeking Alpha). “But we think the unique opportunity we have is bringing the best of Target to these individual neighborhoods, making sure that we custom tailor assortment; we bring the right assortment of apparel and home, baby and kids that's right for that neighborhood, complement it with convenient boots, and household essentials that really make that local Target run impactful for the guests.”