Dive Brief:

• Target is opening three small format stores near college campuses prior to the start of the school year, a company spokesperson told sister publication Grocery Dive in an email. The new stores will be located in East Lansing, Michigan; Lexington, Kentucky and Seattle, Washington.
• Additionally, the retailer plans to open about 30 small format stores a year over the next few years in areas where traditional-sized Target stores may not fit, like college campuses or urban centers.
• Target's spokesperson said its small format stores are designed for convenience and contain a locally relevant product assortment. For college students, this includes grab-and-go snacks and grocery items, household essentials and school supplies.

Dive Insight:

Target's strategy to appeal to college students is a differentiating factor among large retailers. With few other stores zeroing in on students specifically, Target is establishing its brand and building customer loyalty among a key demographic that could become customers for years to come. 

The grocery offering at these small-format stores is also unique. Because college students don't usually require a full grocery shop, Target wants to fill their food needs even with a limited grocery assortment. The setup of these stores could mean an easier shopping trip for busy students who just want to grab a few essentials and get back to campus. 

Although Target hasn't made any definitive remarks about its grocery strategy lately, the company is investing in the category to appeal to more customers. In its recent earnings call announcing results for Q1, chief merchandising officer Mark Tritton said the Food and Beverage category saw comparable growth of about 3%, with growth in every subcategory. Target's chief operating officer John Mulligan said the company would continue to update stores to create more compelling displays, including those in Food and Beverage, and staff more category experts in the department.

The company has also made recent moves with Shipt to offer quicker delivery and has expanded Drive Up service. Store pickup is now available at all of Target's 1,851 locations, Mulligan said, with Drive Up available at 1,250 stores. Delivery serves customers at 1,500 stores in 250 markets. In June, the company expanded availability of same-day delivery via Shipt, no longer requiring customers to have a membership to take advantage of the service. Shoppers can pay an annual fee of $99 for delivery or $9.99 per order.