Dive Brief:

• Target is plotting three of its small format stores for Seattle, according to a list of store openings on its website. In 2019, the company plans to open an approximately 21,000-square-foot store near the University of Washington campus and another 26,900-square-foot store in the 15th and Market development of the Ballard neighborhood. Both stores will offer Order Pickup.

• A third 49,000-square-foot small-format store, which will also offer Order Pickup, will open in Bellevue (across Lake Washington from Seattle) in 2020, Target said.

• The stores are part of an ongoing plan to construct 130 across the country by the end of 2019 in urban, suburban and college campus areas.

Dive Insight:

Target is continuing to build out its small-format store fleet, this time with plans to expand in Amazon's hometown. In some ways, these small stores are doing a lot to combat e-commerce rivals by catering to the immediate in-store needs of young professional and families.

The assortments of the smaller stores are designed to reflect the unique demands of a community, which means in some places the baby category may be emphasized, and in others grab-and-go food and home essentials are the priority. For most of these stores, grocery makes up between 25% and 30% of the assortment.

Having a full, yet tailored, assortment can be challenging in close quarters. Earlier this month, a Target supply chain executive told attendees at a conference that the company is testing a new distribution strategy to cut down its replenishment cycle from days to hours while reducing overall inventory at stores, especially at these small-format locations. This year, Target has focused its expansion of small-format stores in key cities like New York City and Chicago.

While Target may be taking a competitive step to close a gap with Amazon on convenience, that's not likely how it will win, Matt Sargent, senior vice president of retail for Magid, told Retail Dive earlier this year.

The big question is, "Can you do it as effectively as Amazon and as cheaply? That's tough, that's a high bar to set," Sargent said. Target's best bet is category expertise — and differentiation there is key — which means the store has to keep a close eye on data and adapt to the needs of the community, all the while bringing in something unique and convenient, with a personal touch.