Target is set to remodel 1,000 stores by the end of 2020, an addendum to the retailer’s initial decision to remodel 600 stores by 2019. CEO Brian Cornell announced the mass remodeling plan alongside news that Target’s 44 small-format stores generate sales per square foot that are “easily double” that of traditional stores.
The 70+ newly remodeled stores have seen an average 2% to 4% sales increase since being renovated, according to Cornell. Target recorded an average of $300 in sales per square foot across all its stores, compared with at least $600 in sales per square foot from its small-format stores. However, these stores are costlier to operate, in part because they have to take deliveries of essentials more often.
Following the recent success of drugstores, convenience stores and discount stores, Target is leveraging the small-format opportunity to cater to more mobile consumers. In fact, purchases with an urgent or instant need for a particular product account for 61% of shopping trips, according to Nielsen data.
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Target is opening 11 small-format stores this week, including a location in New York City’s Herald Square, to bring its total to 55. The retailer plans to have 130 small-format stores nationwide by the end of 2019.
The 43,000-square-foot, two-story Herald Square location includes a CVS Pharmacy, a regular-sized beauty section, a smaller-than-normal electronics section and 16 self-checkout stations. Apparel and grab-and-go food make up a combined 40% of total sales.
In February, Target revealed that it plans to invest more than $7 billion in store renovations over the next three years.
The retailer has put itself in the spotlight with recent moves to raise its minimum wage to $11 per hour and cut prices on “thousands” of grocery items, showing that the brand is willing to risk short-term profits for long-term success.
