In its its annual Financial Community Meeting, held via webcast amid coronavirus concerns, Target announced its fourth quarter results and outlined some new initiatives, including plans for a new small, convenience store concept.
Starting in 2021, Target will test a new format in urban areas that is about half the size of its current 12,000-square-foot small store footprint.
“Think a convenience store-sized box nestled in neighborhoods across Chicago, Philadelphia or New York or right in the middle of a bustling campus, with still enough space to offer the categories guests want from Target, like beauty, home and grab-and-go food,” said John Mulligan, Target’s executive vice president and chief operating officer. “This design could open up hundreds of additional site options to serve even more people in new trade areas and to give guests a nearby pickup spot for online orders. We expect to sign the first lease of this kind this year, with plans to open and test in 2021. And just like our first small formats, we’ll go slowly at first to learn and refine before moving faster.”
In 2019, Target’s small-format stores contributed over $1 billion in sales. There are now 100 small-format stores, with an additional three dozen planned for 2020.
Target will also add Drive Up to dozens of small-format stores across the country that have parking lots, the company said.
Other initiatives include store remodels and a robotic store fulfillment test, which will begin expanding this year.
The automated system sorts replenishment items by individual store and each aisle within that store. Boxes are sequenced on the truck for easy unloading. By summer, the several hundred stores will be receiving deliveries this way.
The company also said that it is generating incremental growth from shoppers using its in-store and drive-up services. Spending by consumers who pick up their online orders via drive-up is up 25% overall — 50% online and 9% in stores.
Despite concerns, the company said it hasn’t seen any significant impact on its business or supply chain from coronavirus.
“We’ve been planning for weeks with vendors and team managers,” said chairman and CEO Brian Cornell. “We are tracking (merchandise) by category and factory at the product level to be sure we’re on top of it and to be able to plan accordingly.”
