Dive Brief:
- Target’s redesigned stores are centered on freshness and providing an experience-focused shopping trip, according to Minnesota’s Star Tribune. A store in Minneapolis’ Nicollet Mall, for instance, includes LED lights, concrete flooring, more upbeat music, curved aisle ends and more produce and grab-and-go items at the front of the store.
- Joe Perdew, Target’s vice president of store planning and design, told the publication about 20% of the store’s design is dedicated to providing an experience, compared to 5% under the previous model. The company hopes each redesign will lift store sales by 2% to 4%.
- Target is remodeling 110 stores this year and will remodel 300 next year. The remodels generally average $5 million per store, while the Nicollet Mall update cost $10 million.
Dive Insight:
Earlier this year, Target unveiled its plan to spend $2 billion this year and $7 billion during the next three to remodel existing locations and to build more than 100 small format stores in promising urban markets.
As the Nicollet Mall location profiled by the Star Tribune shows, enhancing the store experience for shoppers is Target’s main focus. On the retail side, this includes redesigning fitting rooms and building more lifestyle displays, while on the grocery side, Target will feature more fresh products, including produce and grab-and-go offerings available at the front end.
Overall, the stores will be warmer, hipper and altogether focused on offering customers a reason to come in and shop. Coupled with Target’s growing Restock online ordering and delivery program, building better stores should position the company for growth in the omnichannel retail ecosystem.
But will experience-based shopping do enough to lift Target’s sagging grocery sales? On its own, no. Kroger, Walmart and fresh-focused discounters Aldi and Lidl are wooing shoppers with low prices and high-quality products. These chains also have differentiated market positioning, which is something Target lacks at this point. Indeed, while the retailers fashion and home offerings convey a budget chic image, its grocery offerings are mostly seen as an afterthought.
Target seems to be serious about improving its grocery business. In addition to resetting its merchandising scheme, the company has made some key hires to its food team, including Jeff Burt, formerly of Kroger, as well as ex-Walmart and General Mills staffers. Target also has made some key supply chain improvements to bring in fresher produce.
A more localized marketing and selection, which has produced returns for its beer and wine selection, could provide additional growth for Target. The company has focused on renovating its private brand selection, including Market Pantry and Archer Farms, and will likely build on those efforts as it introduces new brands in departments throughout the store. Target has enhanced its assortment of organics in recent months, and continuing to grow in this space could pay dividends. However, the chain will come up against surging discount natural and organic retailers like Sprouts, as well as the Whole Foods/Amazon wildcard.
Target faces stiff competition in every direction, making it increasingly difficult to carve out a niche. It has to make a move, however, or risk getting caught in a very dangerous middle ground.
