Target's Small-Format Stores Are Working

On the company’s second-quarter earnings call, Target Chief Executive Brian Cornell said the retailer would be nearly doubling the number of small-format stores it has this year, with the ultimate goal of having more than 100 open for business over a three-year period. The plan is to have 30 in 2017, said Chief Operating Officer John Mulligan, with nine opening in July and four opening in the first quarter.

“While we’ve only been open a few weeks, our July openers have been particularly strong out of the gate and as Brian highlighted, the guest response has been phenomenal,” Mulligan said on the Wednesday call. “For the seven smallest format stores that have been open for more than a year, we’re continuing to see sales productivity more than double the company average, and these stores have been delivering high-single-digit comp increases so far in 2017.”

Total Retail's Take: Target is strategically positioning its smaller-format stores on college campuses and in city centers, targeting millennial shoppers in the process. The big-box retailer is hoping to make a positive impression on these younger consumers as they're developing their shopping habits, Cornell said. Creating customer loyalty with millennials is a goal for many companies, especially brick-and-mortar retailers like Target that are struggling with increased competition from online sellers. As more young people move into cities, it makes sense that Target would target these shoppers with smaller-format stores. In addition, these smaller-format stores are in close proximity to large population bases, making them ideal spaces for Target's omnichannel initiatives such as ship from store, and buy online, pick up in-store.