Target sees new smaller Manhattan store as where it’s headed

NEW YORK » Target sees its new smaller stores in mainly urban areas as a symbol of its future, hoping that shoppers will step away from online buying for trips to stores tailored to the neighborhood.

The two-level store in Manhattan’s Herald Square, not far from the Macy’s flagship, is about one-third the size of Target’s average store. It’ll offer same-day delivery, more self-serve checkouts than usual, and a small grocery area near an entrance so shoppers can quickly grab an item or two. It’ll also be the first to sell Target-branded merchandise like mugs and T-shirts emblazoned with the Bullseye mascot.

Target is spending $7 billion over three years to remodel old stores, open small ones in cities and college towns and offer faster delivery for online orders. The Herald Square store is among 12 mostly small-format stores opening this week in urban markets like Chicago, Los Angeles and Philadelphia. That will bring the number to more than 50 small-format stores, with plans to operate more than 130 by the end of 2019.

While all retailers need to worry about online growth and the expansion of Amazon, Target CEO Brian Cornell said Thursday that with the new urban stores, Target is seeing it can attract new customers. “Our stores are the drivers” of digital growth, he said.

Cornell says sales per square foot at small-format stores in urban markets and college towns are twice that of regular stores. So that would make it about $500 to $600 per square feet. He added that the remodeled stores have been well-received, and the company is accelerating plans to remodel 1,000 of its 1,800 stores by 2020. It had originally planned to remodel 600 by 2019.

Target had started testing same-day delivery at a store in Manhattan this past summer, letting shoppers have purchases made in the store delivered to their homes for a fee. Cornell says shoppers are spending six times more than the average shopping basket at that store when they use the same-day service.