Smaller Formats & Grocery Focus Lead Target's Growth Plans

MINNEAPOLIS — Target Corp. is taking a dual-pronged approach to growth by focusing on smaller formats and grocery.

According to Laurie Mahowald, Target's vice president of real estate, the retailer is planning to update its core large format stores while penetrating new urban markets with smaller formats that may only boast 12,000 square feet, Convenience Store News sister publication Progressive Grocer reported.

Recently, the Minneapolis-based retailer opened a 33,000-square-foot store in the South Beach area of Miami and a 59,000-square-foot store in West Hartford, Conn., bringing its total small format location count to 100-plus.

Approximately 30 small format Target stores will open this year — a pace of expansion that speaks to the popularity of a concept that was only introduced five years ago and represents a new growth vehicle that has become highly selective about opening big stores, according to Progressive Grocer.

Mahowald didn't comment on whether or not Target plans to accelerate the pace of small format openings, but did say that the company is "really excited about the flexibility of the real estate and the format."

Flexibility is evident is some real estate choices the retailer has made. Next April, Target is set to open a 20,000-square-foot store on the Las Vegas strip. The company also opened five smaller format locations in Manhattan, with the prospect of more to come in the city, as well as the surrounding New York City boroughs.

"We have so much room to grow and better serve those areas," Mahowald said. "We are able to serve an entirely new guest."

Target is also putting grocery into focus. According to Stephanie Lundquist, executive vice president of food and beverage for Target, the company's "goal in grocery is to be Target."

"Food and beverage should be part of the magical Target experience," she said, noting that Target's grocery business has lacked a point of view.

To that end, the retailer is launching a new private grocery brand, Good & Gather. Once fully rolled out, it will be Target's largest owned brand to date, reported Drug Store News, sister publication to CSNews.

"In building Good & Gather we knew we had to start with a blank slate," said Lundquist.

The rollout of the brand is being executed in several phases:

• Nearly 650 products began hitting store shelves this week.
• An additional 1,000 products will be added in the spring of 2020.
• A total of more than 2,000 items across every food category will be featured by the end of 2020.
• With the rollout of Good & Gather, Target will start the phase out of its Archer Farms and Simply Balanced grocery brands and reduce its Market Pantry line.

The launch of Good & Gather comes as grocery sales at Target continue to rise. The retailer has racked up eight straight quarters of same-store sales growth and seven straight quarters of market-share growth in the category. Food and beverage now accounts for one-fifth of Target’s annual sales.

"Food and beverage is playing an outsized role in our success," Lundquist emphasized.

Target operates more than 1,800 retail locations.

Convenience Store News, Progressive Grocer and Drug Store News are properties of EnsembleIQ.