Target Is Betting on Larger-Format Stores for Future Growth

At a time when many retailers are opting to build smaller-format stores, Target revealed on Thursday a new store design with a larger footprint.

According to the Minneapolis-based big-box retailer, the new format features more than 20,000 square feet of additional space than the chain average and will incorporate new design elements in a store measuring nearly 150,000 square feet.

While the retailer will continue to open stores of all sizes, Target said it will now focus on this larger footprint in the next few years, and will bring its reimagined store design to future remodels as well as new stores across its chain.

Target noted that the new larger store layouts will help fuel its popular same-day fulfillment services with a backroom space that’s five times larger than previous stores of similar size. This additional space will help support the ongoing growth Target has experienced, with its stores fulfilling more than 95% of the retailer’s digital orders and same-day services accounting for more than 10% of its overall sales.

Plus, these larger Target stores will offer guests the retailer’s full assortment of merchandise, including expanded food and beverage, exclusive brand partnerships and a curated mix of owned brands and national brands.

As for the new design elements, Target said that these new stores feature larger windows and more open layout that will bring in more natural light, and will infuse natural elements like plants and reclaimed wood to create a “welcoming” space.

Starting in 2023, more than half of Target’s approximately 200 full store remodels and almost all the retailer’s approximately 30 new stores will include elements of the new design. Beginning in 2024, all of Target’s remodels and new stores will feature the majority of the reimagined store design elements.

The first location to adopt this new design and larger format recently opened outside of Houston.

Target Larger Store Format
Target’s new stores feature larger windows and design elements that nod to the local community.
CREDIT: Courtesy of Target

“With our reimagined store design and larger store footprint that better supports our same-day services, we can give guests more of what they love while incorporating features that build on our commitment to sustainability, community and helping all families discover the joy of everyday life,” John Mulligan, EVP and COO at Target, said in a statement.

Target has made investments in its store hub model since before the pandemic. Around 2017, Target introduced a plan that included a multibillion-dollar investment into store remodels, opening smaller-format stores in urban centers such as New York City, and redesigning its stores as fulfillment hubs and activating 1,900 fulfillment centers across the U.S.

Since then, the retailer has implemented other ways to use its stores as fulfillment hubs by giving team members a space to unpack and sort merchandise before it enters a store’s backroom. This helps the company move merchandise more efficiently to fulfill more orders.

In July, Target announced it will roll out three new sortation centers throughout the next year to help power delivery across the country. Two of these centers will be located in greater Chicago, and one will be positioned in the metro area of Denver, Colo., adding to the company’s existing six sortation centers across the U.S. The centers function as places to pack and sort items for local deliveries.

The latest move, however, comes as other retailers ramp up their openings of smaller-format locations. Macy’s, Bloomingdale’s, Kohl’s and Nordstrom have all made major investments in the past few years to open more local, smaller locations.

Target Larger Store Format
The new Drive Up order pick-up area at Target’s larger-format stores.
CREDIT: Courtesy of Target

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