Target Plans to Make a Huge Change to its Stores

When Brian Cornell became Target (TGT) - Get Free Report CEO in 2014, he took over a company that had lost its way. The retailer was reeling from its data breach scandal which compromised debit and credit card numbers of millions of customers. It also had lost a bit of the so-called "Tar-Jay" magic.

Target wasn't in real trouble, but it was teetering on the edge of it. Cornell responded by unveiling a massive plan to reenvision the chain's stores. This included adding store-within-a-store partnerships that would grow to include Ulta Beauty along with Starbucks, Disney, and Apple. It also involved building unique owned-and-operated brands including some celebrity partnerships that gave the chain better control over its merchandise.

The biggest change, however, may have been the massive rehab/remodel effort Cornell led at the chain's stores. Instead of taking a one-size-fits-all approach, Target decided to design stores to fit where they operated.

That meant that in urban environments stores might have more grab-and-go products in the front, while a store in a tourist-heavy area might be laid out to serve that audience first. Target also added smaller format stores designed to be opened in cities and near college campuses.

Basically. Cornell added flexibility to the chain's model. He gave the company the opportunity to best serve its audience in each market. Now, the CEO will lead the charge into a new type of store that will help the retailer meet the changing needs of its customer base. 

Target Has a New Store Format 

Cornell has presided over Target during a period of massive change. The pandemic accelerated that and made delivery and curbside pickup more popular. Because of that, it makes sense that the chain's new large-format design embraces serving those demands.

The new stores are bigger than the chain's current large-format stores. They're 150,00 sqaure feet -- 20,000 square feet larger than the chain's average. Target will still open stores of all sizes based on the needs of the market, but the chain expects to focus on this new larger format "in the next few years," according to a press release.

Target also will bring its reimagined store design -- which features a more open layout and localized elements to inspire and serve its guests -- to future remodels as well as new stores across its chain, according to the retailer.

“Target’s stores are at the heart of how we deliver for our guests, whether they browse the aisles, shop online or stop by for same-day services like Order Pickup and Drive Up,” COO John Mulligan said. "...With our reimagined store design and larger store footprint that better supports our same-day services, we can give guests more of what they love while incorporating features that build on our commitment to sustainability, community and helping all families discover the joy of everyday life.”

Target's New Stores Serve the Omnichannel Customer

The larger stores will mean more merchandise, but that's not the chief reason for the bigger footprint. Target expects to use much of the space to support its same-day  fulfillment services and deliver on its stores-as-hubs strategy for digital fulfillment.

Target has already debuted the first version of the new store design outside of Houston. 

"The new store layout delivers a backroom fulfillment space that’s five times larger than previous stores of similar size. This additional space will help support the ongoing growth Target has experienced, with its stores fulfilling more than 95% of the retailer’s digital orders and same-day services accounting for more than 10% of its overall sales," the company shared in a press release.

Beginning with the new year, more than half of Target’s approximately 200 full store remodels and almost all the retailer’s approximately 30 new stores will include elements of the new design. In 2024, all remodels and and any new stores will feature the majority of the reimagined store design elements.