The CityTarget experiment has helped Target learn how urban shoppers’ behavior is different. (Apartment living, public transportation or walking instead of cars and so forth.) And Target’s assortments in its full-line stores are much more concise than what a typical Walmart carries — the ability to edit even further is more ingrained in the Target culture. Finally, Target continues to have a brand cachet (which Mr. Cornell is busily reinforcing) more likely to resonate with urban shoppers in the first place.

Yes. Target is leveraging the emergence of mixed-used development while Walmart created nothing more than a scaled-down stand-alone. Mixed-used is one of the most overlooked opportunities for major retailers to scale down square-footage while offering omnichannel fulfillment to customers/resident within walking distance.

As always, we’ll see.

There is no magic wand guaranteeing retail success. The issue isn’t format or — with all due respect to Burt — even brand. No, the issue is execution.

If Target does their homework, conducts their ethnographic research correctly and picks the right sites, assortments, pricing models and service levels then the smaller, urban stores will perform well. Of course, the same could have been said about Walmart’s entry into the urban, small store market.

On the surface it seems Target does, in fact, have an advantage over Walmart insofar as it appears they are trying to build out a format influenced at least by their target customers’ input and lifestyles.

The question is, will they read the tea leaves correctly?

Can’t imagine Target fairing better. Breaking new ground is not what they are known for, nor is small stores.

Target will only fare better than Walmart IF they really do personalize the offerings to the consumers in the neighborhood, offer the possibility of delivery of any other items offered online and can manage the supply chain issues profitably.

Target will open very few compared to Walmart and will only open in densely-populated urban areas in nice neighborhoods. Usually where the population is more vertical. That gives Target an advantage for achieving success.

I think that the brand Walmart is the polar opposite of what the small, urban format is about. I’m not sure about merchandising problems, but the brand fit for them was miserable. I think the fit with the Target brand is much better, however they need to make sure they build a sense of discovery into the small format stores (easy to do). For that reason, I think they might succeed where Walmart failed.

Yes, Target can succeed in the smaller format. Brand popularity and locations will help.
The bigger issue will be setting up a productive operation to keep cost down and sales per square foot up. A drug store-sized location is very different than a big box operation. That may seem obvious but Target has missed in the past. And this change in operations will take time. Patience.

I believe that Target will be successful because they have learned from Walmart’s errors. Their merchandising will be customized for a smaller footprint and a different customer. In addition they will be more nimble in using their supply chain. Walmart did miss on merchandising but the real issue to me is not being able to adjust their supply chain from a large format mentality to a small one.

Calling Walmart’s Express stores a failure is a bit strong (perhaps completely inaccurate) and comparisons to Target’s still-sparse small-format effort are off as well. Unlike Target, Walmart operates a highly-productive mid-sized format (Neighborhood Market) that can take up the slack in smaller markets and these stores more easily wick off of Walmart’s existing supply chain processes. Walmart’s shuttering of its Express stores is a testament to the success of its Neighborhood Market format rather than a stand-alone failure.

The more comprehensive (yet navigable) assortments in Walmart’s Neighborhood Markets stores also further distance it from the legion of true small-format competitors including dollar stores, convenience stores, drug retailers, hard discounters and others.

Target is operating in two arenas that are crammed with experienced operators (big box/small box). Not an easy road ahead!

Doesn’t it concern anyone that monster enterprises like Target and Walmart, with their huge research and resources and experience, don’t seem to have more than tea leaves to guide them in whether or where or how to establish this store model or project its success (or failure)?

I was happy to see that Target was reaching out to its potential small-store customers to find out how “they live and shop” and meet this, which could potentially be different for different areas, but that should take care of many, but not all, of the answers about where to locate and what to carry.

Two questions come to mind: Why should Target fare better? And, how will they fare better?
First, Target has to learn from Walmart’s mistakes. They have to keep their focus on what the consumer wants/needs to buy. They have to adhere to the changing demographics of each community they enter. Not one size to fit all. Baltimore for example, has a large Jewish population in one area of the suburban community, while on the other side of the city is a large Polish and Italian population. The food needs will be different. Products popular in one area will not sell well in the other.

Next, to succeed long term, they can not drink their own Kool-Aid. Learn from the potential successes and stick with what will keep them on the plan to be successful.

My third concern is Target themselves. Can they refrain from making mid-course alterations that takes them from a potential win to a loss?

When Target enters a market, the company brings a completely different set of obstacles that are in need of attention and remedy assurances from the consumer perspective. Out-of-stocks, competitive pricing, IT security leakage and e-commerce issues will be foremost in the minds of the urban consumer when in contemplation of the Target c-store shopping experience. These needs should be addressed in the expansion and retention plans for their c-store goals with little concern in addressing 20 pound dog food bags. I am not opposed to the goals of the company in its desire to expand and grow. What is concerning is the attention being paid to core business issues which will increase expansion investment risk exponentially if not resolved prior to moving into a new market that owns awareness of these problems. If there is a concern that Walmart faced that is common to Target as well, it may be in location, public transportation access, average weather conditions and store rental/lease fees. These are concerns that might be addressed with inexpensive order delivery and third… Read more »

Target has two things in its favor.

As Mr. Flinkinger points out, “Target has always enjoyed better branding in urban markets than Walmart.”

They also clearly understand that they need develop different assortments for these formats and are approaching the research in a smart way to get it right.

About the only thing that could derail their success is if they choose poor locations. Perhaps they have learned something from the Canada debacle.

I expect Target will do reasonably well with these stores — far better than Walmart. Total success? Only time will tell — there’s so much more to success than just “it’s a solid theory.”

However, Walmart’s small stores were inherently opposite the brand Walmart had built — a fundamental contradiction. Thus, they lost a tremendous amount of the market power opening a small store as opposed to a large store.

Target’s brand is a reasonable extension to these stores. The red flag is the description of them as “convenience sized”… will Target hit the sweet spot in actual store size or will language like this lead them to believe they must be convenience stores? That seems of concern.

Personally I think the DL “gap” is the more important issue but … Walmart’s decision to end their experiment was a choice. Maybe it was profitable — just not enough — or maybe it wasn’t, but could have become so with more effort.

Target has different standards on what is acceptable, so their effort may fare no better, yet be judged by them as a “success.” By objective measures, I don’t think the performance will be much different … they’re still a “biggie” trying to do “small.”

I’ve been to the specific Target store in the rendering and used to live in the neighborhood where it stands. The assortment is ideal and optimized for the area, which is why I think it will do very well, and why I believe others will too if they follow the same model. It’s in a university neighborhood and emphasizes merchandise perfect for the college student market segment (i.e. office supplies, school logo apparel, convenience foods, small electronics, dorm refrigerators, fans, etc) while carrying limited or no items from departments that would be well-represented in an average Target, but wouldn’t be needed by the residents of this neighborhood (such as toys, lawn and garden, large electronics, etc). By contrast, the former CityTargets I’ve been in felt more like condensed versions of regular Targets and it didn’t seem like the unique needs of their shoppers were given as much thought. Had they stuck with that model, I wouldn’t be as optimistic, but now that they are paying closer attention to the assortments and the specific needs of… Read more »

The variety store of the 1960s is alive and well at Target Express. Visited one that is only two blocks from a former GC Murphy AA store. Everything old is new again. Loved the convenience and variety. Didn’t need a car to get there and walked out with essentials which saved me a tedious trip out to big-box-ville.

I’ve been in each store type and I believe Target has conducted a well managed pilot and appears to have a solid proof of concept to selectively expand.

The last time I was in the CityTarget off the University of Minnesota campus, you could see the assortment changes to align with the student/faculty/urban shopper (small packs, convenience driven) and the increase of high-margin Target brands to help profitability. That particular store manager advocated for the unique needs of the guest and pushed for quicker store set changes and assortments to recognize campus events like what you need to set up your dorm/apartment, parents weekend, etc.

Yes. They have the appeal of the upscale shopper in many of their markets.

It is a wise move by Target. Small format has its own advantage. Strategically it makes sense for Target not to play in the turf where Walmart is strong. Instead they are targeting  Walmart where it is weak. 7-Eleven has been a success in the small format and has been successful where Aldi, Costco, Metro, Woolworth, etc., exist. I wont be surprised if Target is able to create a niche for itself in this segment. They can leverage their size and pick assortment for various formats and leverage their size to gain pricing advantage from vendors to drive margins while staying competitive. They need to keep costs down and under control in the small format.

Target should be careful in expanding and must test their assumptions in one geography to see how it fares and slowly expand based on learnings about this format.