Target increases store remodels to 1,000 units

Dive Brief:

Target said in a company blog post Thursday that the revamp of its stores is paying off and the company has decided to remodel 325 more than originally planned — for a total of 1,000 of its 1,800 stores.
CEO Brian Cornell told reporters at the grand opening of Target’s Herald Square store in Manhattan Thursday that the new stores are seeing a 2% to 4% sales rise, according to the Minneapolis Star-Tribune. That's more than twice a typical store which saw sales rise 1.3% last quarter, according to Fortune
The Herald Square location across from Macy’s famous flagship is part of Target’s assertive move into New York City. The retailer is on track to open 28 small-format stores this year (with 11 celebrating grand openings this week nationwide), for a total of more than 130 by the end of 2019. Target will expand same-day delivery services in New York beyond the Tribeca neighborhood pilot to new stores in mid-town, Bensonhurst and Fulton Street in Brooklyn.

Dive Insight:

The kind of integration of brick-and-mortar and online sales that Target is describing requires new ways to track sales. That is, stores with same-day delivery and pickup services and that serve as fulfillment hubs for online orders themselves appear to be bumping up sales, both online and off.

In Tribeca, for example, where Target’s merchandising is geared to an urban populace and where delivery services include same-day delivery, customers are buying four times more each time they stop in, the retailer said.

Target executives in March unveiled a series of initiatives designed to reverse the big box retailer’s same-store sales declines, including an investment of more than $2 billion of capital in 2017 and more than $7 billion over the next three years. The company said then that it would use about $1 billion of operating profits this year to improve brick-and-mortar and digital operations.

At that time Cornell also said much of the investment will go to adding more than 100 small format urban stores over the next three years, as well as overhauling existing locations using aspects of the retailer’s LA25 concept store that have tested well. Stores are also being reconfigured to more efficiently serve as fulfillment hubs for online orders.

The fact that Target is increasing its physical presence in New York City as well as expanding delivery is in contrast to Walmart, which has no locations but is planning free same-day delivery there, Walmart U.S. e-commerce chief Marc Lore said last month. Walmart's Jet e-commerce unit already provides the service in New York and, to make that easier, this summer installed "smart locks" in 1,000 apartment buildings there. Latch’s system allows someone to unlock a door with an iOS or Android smartphone, smartcard or special doorcode (or a key). The apps let building managers know when someone arrives at a building, allow them in as needed or provide time-coded limited access.