Dive Brief:

• Target on Sunday opened a 30,000 square-foot store in New York City's Time Square, according to a company announcement. 
• The store location will feature fulfillment options like order pickup. 
• Target said that the Times Square is for both tourists and local shoppers, in part due to its location between two of New York City's largest subway stations.

Dive Insight:

Target is making good on its efforts to experiment with store sizes. 

The retailer first announced in 2019 that it was expanding its New York City presence with a small-format Times Square location. At the time, the company described Manhattan as a "priority growth market for the company." The retailer currently operates around 20 stores in New York City.

The Times Square store, the company said, is an example of the company's efforts to "open and operate stores in spaces of any size — including where a traditional store may not fit." The company in the past has referenced how small-format locations in particular drive higher than average sales and higher gross margin rates compared with larger format stores.

In March, the retailer said that it would add 30 stores to its footprint in 2022 to reach new markets, including mid-size stores in suburban areas and small-format locations in urban cores. That, along with renovations to 200 stores and opening additional Ulta shop-in-shops, makes up part of Target's larger goal of investing $5 billion to scale operations this year.

Brick-and-mortar locations also serve as hubs for fulfillment, an area that accelerated tremendously for Target during the early days of the pandemic. In the company's latest earnings call, Target COO John Mulligan said that average sales per store have risen 30% in the last two years. Together, may be the impetus behind a larger push to open locations with a variety of square footage options.

"The ongoing investments in our supply chain are designed to keep our stores at the center of how we serve our guests," Mulligan said. "Just as important are the continued investments we make in the physical stores themselves." Mulligan added, saying that the company will continue to open around 30 new stores a year. 

Target's decision to further penetrate New York City is also a move that is different from big-box competitor Walmart. Walmart currently does not have locations within Manhattan, although it does have Supercenters on the city's outskirts.

In 2018, Walmart announced that it was using its Jet.com unit as part of a larger strategy to become a shopping destination for city consumers. The effort, which was focused on New York City, featured same-day and next-day delivery, local products and customized delivery options to accommodate needs like leaving purchases with a building doorman. 

Jet.com was positioned as a next generation of shopping for city dwellers and sported a tagline of "shop curated brands and city essentials all in one place." By 2020, Walmart shuttered the effort.