In the midst of economic change, Target has remodeled 50 large stores and opened 100 mini ones. So far, it is looking like the right move for the Store chain. Target has added that the current model is on pace for another 30 small stores to open across the US every year. They are expecting to remodel 300 other stores in 2020. This makes for an estimated 1,000 of their over 1,800 stores to be renovated.

Boosted Earnings

Target’s reported earnings are demonstrating that this shift is a strong move and a wise investment. It provides its stores more traffic while other stores are struggling. Just days after the retailer showed earnings far better than estimates, it reached huge milestones this week by putting shares at new highs.

The Plan

Target announced they’ve finished remodeling the 500th location and opened the 100th^h small-scale store since they first announced the $7 billion plan for growth in 2017. The plan included placing small-scale sites in major areas like the University of North Carolina, New York, and other campus areas. The plan also laid out fresh grocery space and redesigns in many of the standard format stores. The milestones are being checked off, and Target is showing their investment is paying off.

What the Execs Say

COO John Mulligan said in an interview that the company believed the in-store experience was key. He stated that 90% of retail is still done in stores, and they aren’t going anywhere. He pointed out the company is on track to open another 30 small-scale stores in areas like Chicago, Los Angeles, and New York, along with further remodels.

Mulligan referenced they made errors and learn as they go. They shut stores down to remodel, but have found customers prefer to work around the construction, so they stay open for now. When keeping the stores open, there is a 2-4% increase in sales during the first year after a remodel.

Smaller stores are around 15,000 square feet, and the standard stores come in about 40,000 square feet. With the smaller locations, Mulligan said they learn to get the right merchandise for the demographic. They are using this in other stores and “localizing more.”

Providing a Competitive Edge

The smaller stores are proving to be more competitive than some of the standard Target stores. This may keep Target safe from a recession, because of their ability to localize. It speaks to what the store has been good at – giving people what they need!

Source:

https://www.cnbc.com/2019/08/23/target-opens-100-mini-stores-remodels-500-bigger-ones.html

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