Target to shift to larger 150k square foot prototype

Predicting the demise of Sears & Kmart since 2017!
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Re: Target to shift to larger 150k square foot prototype

Post by storewanderer »

arizonaguy wrote: November 11th, 2022, 3:36 pm At least they are still building stores unlike Walmart.
Wal Mart is still building a store here and there... one looks to be in process of coming to Dayton, NV for instance going through approvals now.

Let's see how many stores Target actually builds in the next 3 years in this 150k square foot model. I am guessing it will be less than 20 stores total for all years.

Target would be stupid to not develop some of these in CA given that CA is one of its best markets and there is a high demand for e-commerce services in CA. Placing these at the outskirts/edge of a densely populated area with heavy e-commerce volume would be a very wise move as they'd end up with a store that would have extremely high customer counts as well as be extremely productive from an e-commerce standpoint. So I would expect they will absolutely put some of these in CA.
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Re: Target to shift to larger 150k square foot prototype

Post by buckguy »

One of the articles said that the space for fulfillment will be 5x larger than existing stores. Given that these stores aren’t that much larger than existing stores, the overall experience won’t be much different, and will have only minor differences related to merchandise and decor. They have saturated most markets, as have most big boxes, but may have some backlog of potential locations because of COVID-related disruptions to developments.

My guess is that they have exhausted most of the best locations for the smaller formats. They focused on places near large college campuses or urban/inner ring locations with high foot traffic and their usual demographic (or both as in the case of the DC a store near American U and Tenleytown Metro). The ones that I’ve been to seem to do a decent business. The negative Yelp reviews seem to come from people who hadn’t figured out that the stores were small or that you can spend a couple minutes online figuring out what they have. I’ve had better luck finding a few things at the smaller stores. The larger City Targets do very good sales/sq ft. The one in Columbia Heights DC led the chain when it first opened and still does enough volume for over a dozen self checkouts.

In DC, the one gap I see for a small store is Georgetown/Foggy Bottom. They did plan to go into the formerly dead mall in Georgetown but instead another big box took their place. Now that some large retail/restaurant spaces are vacant near George Washington University, I could see them doing a small store there. That area is convenient for GWs medical center.
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Re: Target to shift to larger 150k square foot prototype

Post by storewanderer »

buckguy wrote: November 11th, 2022, 7:56 pm One of the articles said that the space for fulfillment will be 5x larger than existing stores. Given that these stores aren’t that much larger than existing stores, the overall experience won’t be much different, and will have only minor differences related to merchandise and decor. They have saturated most markets, as have most big boxes, but may have some backlog of potential locations because of COVID-related disruptions to developments.

My guess is that they have exhausted most of the best locations for the smaller formats. They focused on places near large college campuses or urban/inner ring locations with high foot traffic and their usual demographic (or both as in the case of the DC a store near American U and Tenleytown Metro). The ones that I’ve been to seem to do a decent business. The negative Yelp reviews seem to come from people who hadn’t figured out that the stores were small or that you can spend a couple minutes online figuring out what they have. I’ve had better luck finding a few things at the smaller stores. The larger City Targets do very good sales/sq ft. The one in Columbia Heights DC led the chain when it first opened and still does enough volume for over a dozen self checkouts.

In DC, the one gap I see for a small store is Georgetown/Foggy Bottom. They did plan to go into the formerly dead mall in Georgetown but instead another big box took their place. Now that some large retail/restaurant spaces are vacant near George Washington University, I could see them doing a small store there. That area is convenient for GWs medical center.
The small formats aren't worth it except in limited circumstances. Even in those limited circumstances where it appears to be a home run, the small format is having other problems that pressure profitability (see: San Francisco). They are not getting the ROI of the larger stores. Customers buy fewer items than they buy in the larger stores. Operating costs and overhead are far higher per square foot despite fewer employees, smaller mix of items, etc.

I still think what could be viable is small pick up locations for online orders only near where they placed these small stores. As you point out these locations have foot traffic but when average tickets are in the $15 range vs. average tickets well over $50 for a larger format store, and the small stores do thousands fewer tickets per week than the larger stores, the sales and profits just aren't there for these smaller stores to even be worth management effort. And as these stores start to cause brand dilution as evidenced by an inability to keep shelves stocked in the small stores, negative Google/Yelp reviews, shorter store hours for whatever reason (lack of customers, crime, whatever), it is questionable if these small stores help the brand or hurt the brand.

Those college students who were so excited to have Target, after they get burned by the small Target not having what they need a few times and go back to their dorm and order from Amazon, and Amazon takes care of their needs, are potentially lost customers forever long after they move on from the college due to having the negative experience. In cases like that, Target would have been better off not even being there. No interaction at all is better than a negative one.

I think Target and Wal Mart are both in trouble. The difference is Wal Mart has so much grocery/consumables business to wash out the major other problems it is having. Target does not have that luxury, and their execution and store operations have nosedived down to a level of a bad 90's Kmart this year. These small format stores will be the first casualty next year unless Target has an excellent Christmas.
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Re: Target to shift to larger 150k square foot prototype

Post by Romr123 »

veteran+ wrote: November 11th, 2022, 1:31 pm I was there for that SuperTarget in Indio. I went to the grand opening (doing recon for F&E).

Beautiful store and impressive Super Market side!

Bad timing and wrong part of the Coachella Valley (IMO).

Looks like these new large Targets will not be in California. So annoying that the 4th largest economy in the world gets squat, as usual!

🤪🤷‍♂️
Yeah, although 15 years later the power center in Indio looks finally to be in reasonable shape, I wonder how much more successful Target would have been just plopping another SuperTarget up at I-10 and Ramon/Date Palm/Monterey and skipping the Indio location--Indio is where the I-10 and 111 converge. Would have gotten them out of the small (former Gemco) Cathedral City store; eliminated KMart in DHS way earlier than 2019, and put them in a more central location for 29 Palms/DHS as well as Palm Springs.
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Re: Target to shift to larger 150k square foot prototype

Post by veteran+ »

Romr123 wrote: November 12th, 2022, 8:57 am
veteran+ wrote: November 11th, 2022, 1:31 pm I was there for that SuperTarget in Indio. I went to the grand opening (doing recon for F&E).

Beautiful store and impressive Super Market side!

Bad timing and wrong part of the Coachella Valley (IMO).

Looks like these new large Targets will not be in California. So annoying that the 4th largest economy in the world gets squat, as usual!

🤪🤷‍♂️
Yeah, although 15 years later the power center in Indio looks finally to be in reasonable shape, I wonder how much more successful Target would have been just plopping another SuperTarget up at I-10 and Ramon/Date Palm/Monterey and skipping the Indio location--Indio is where the I-10 and 111 converge. Would have gotten them out of the small (former Gemco) Cathedral City store; eliminated KMart in DHS way earlier than 2019, and put them in a more central location for 29 Palms/DHS as well as Palm Springs.
Yes.........................I agree!
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Re: Target to shift to larger 150k square foot prototype

Post by mbz321 »

Alpha8472 wrote: November 11th, 2022, 11:21 am
Perhaps Target might try to copy Walmart and expand the selection of products to match. At Target for example you cannot find much in the way of auto parts or garden supplies. It would be interesting to see a full sized supermarket inside.
This right here. If the stores are going to be larger, there needs to be a bit more variety in merchandise, and as of late from my experiences, Target has has trouble filling the shelves as it is in non-core departments like hardware/auto/sporting goods/pet supplies/etc. I can't say that I am a frequent Target shopper as I can never get everything on my list.
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Re: Target to shift to larger 150k square foot prototype

Post by storewanderer »

mbz321 wrote: November 12th, 2022, 5:14 pm
Alpha8472 wrote: November 11th, 2022, 11:21 am
Perhaps Target might try to copy Walmart and expand the selection of products to match. At Target for example you cannot find much in the way of auto parts or garden supplies. It would be interesting to see a full sized supermarket inside.
This right here. If the stores are going to be larger, there needs to be a bit more variety in merchandise, and as of late from my experiences, Target has has trouble filling the shelves as it is in non-core departments like hardware/auto/sporting goods/pet supplies/etc. I can't say that I am a frequent Target shopper as I can never get everything on my list.
Target feels to me like it continues to cut SKUs in those non-core departments like hardware/auto/sporting goods and then even after cutting SKUs does a poor job keeping these categories stocked. I don't know why pet is a non-core category now but I agree with you, the way they have it assorted, it is starting to feel like a non-core category for some reason.

With the way pricing has been rising in these categories hardware/auto/sporting goods as of late, I feel as if the retailers selling these items are no longer trying to price competitively anymore and everyone is getting a decent margin. There is less competition out there and it feels like the "race to the bottom" has ended in those categories. These categories are not labor intensive, the merchandise does not go out of season quickly, and I see no reason why Target should not handle more SKUs in these categories. But I've said that for many years and Target refuses to change and continues to double down on its merchandising strategy that is only useful for folks who live in an apartment and never have to fix anything or make improvements to their home/auto.

As long as sales of perceived higher margin decor/seasonal/clothing items remain, I don't see Target changing. Also with the way those categories go out of season often, are labor intensive to arrange/maintain, I question if they are REALLY even higher margin than a strong hardlines program would be, at the end of the day. On paper at a literal item wholesale cost vs. retail sales price analysis yes Target is focusing on the higher margin categories if you only look at those two metrics...
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Re: Target to shift to larger 150k square foot prototype

Post by Super S »

storewanderer wrote: November 12th, 2022, 5:19 pm
mbz321 wrote: November 12th, 2022, 5:14 pm
Alpha8472 wrote: November 11th, 2022, 11:21 am
Perhaps Target might try to copy Walmart and expand the selection of products to match. At Target for example you cannot find much in the way of auto parts or garden supplies. It would be interesting to see a full sized supermarket inside.
This right here. If the stores are going to be larger, there needs to be a bit more variety in merchandise, and as of late from my experiences, Target has has trouble filling the shelves as it is in non-core departments like hardware/auto/sporting goods/pet supplies/etc. I can't say that I am a frequent Target shopper as I can never get everything on my list.
Target feels to me like it continues to cut SKUs in those non-core departments like hardware/auto/sporting goods and then even after cutting SKUs does a poor job keeping these categories stocked. I don't know why pet is a non-core category now but I agree with you, the way they have it assorted, it is starting to feel like a non-core category for some reason.

With the way pricing has been rising in these categories hardware/auto/sporting goods as of late, I feel as if the retailers selling these items are no longer trying to price competitively anymore and everyone is getting a decent margin. There is less competition out there and it feels like the "race to the bottom" has ended in those categories. These categories are not labor intensive, the merchandise does not go out of season quickly, and I see no reason why Target should not handle more SKUs in these categories. But I've said that for many years and Target refuses to change and continues to double down on its merchandising strategy that is only useful for folks who live in an apartment and never have to fix anything or make improvements to their home/auto.

As long as sales of perceived higher margin decor/seasonal/clothing items remain, I don't see Target changing. Also with the way those categories go out of season often, are labor intensive to arrange/maintain, I question if they are REALLY even higher margin than a strong hardlines program would be, at the end of the day. On paper at a literal item wholesale cost vs. retail sales price analysis yes Target is focusing on the higher margin categories if you only look at those two metrics...
Target has been weak in hardlines for years and has scaled way back. Automotive for instance....At one time you could buy things like oil and air filters as well as spark plugs, among other items. Oil was well stocked with good variety and prices. Not you are lucky to even find one aisle with maybe oil, air fresheners, and washer fluid, and maybe floor mats, and it is no longer competitively priced.

I have not heard much about how the Kmart-turned-Target in Jackson, Wyoming is doing with a more localized selection and how what they carry compares to what Kmart had, but that is one location which seems like it would do better with a stronger hardlines mix.
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Re: Target to shift to larger 150k square foot prototype

Post by storewanderer »

Super S wrote: November 12th, 2022, 9:46 pm

Target has been weak in hardlines for years and has scaled way back. Automotive for instance....At one time you could buy things like oil and air filters as well as spark plugs, among other items. Oil was well stocked with good variety and prices. Not you are lucky to even find one aisle with maybe oil, air fresheners, and washer fluid, and maybe floor mats, and it is no longer competitively priced.

I have not heard much about how the Kmart-turned-Target in Jackson, Wyoming is doing with a more localized selection and how what they carry compares to what Kmart had, but that is one location which seems like it would do better with a stronger hardlines mix.
Looking at reviews on that Jackson Target, which are below average for a newer store, noticing the following:
1. Comment from one month ago saying the store has no rain coats, windbreakers, or plastic ponchos and no coats/jackets of any kind in women's
2. Multiple comments about "empty shelves"
3. Various comments about high prices
4. Multiple comments about too little hardlines/sports/auto, too much grocery (when considering nice Smiths, Albertsons, Whole Foods already nearby) and too much space for Starbucks

Looking at the interior this place looks like it could be in downtown San Francisco or downtown Chicago with what it is trying to sell and how it looks. There appears to be zero acknowledgement of this being a store that is in an outdoors focused/winter sports/camping focused location. Unbelievably tone deaf here. What do they have to offer here that isn't already offered by Smiths or Albertsons when you get down to it? Some clothing? Clothing that isn't really appropriate for a rugged market. That's about it.

This is certainly more useful than Kmart would be if it were still open (though I'm sure Kmart would have coats... lots of coats...) or an empty building would be but I am thinking subdividing this space into a couple retailers that would have brought more products in would have been better.

Target is not hitting the mark with these small format stores.
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Re: Target to shift to larger 150k square foot prototype

Post by buckguy »

I've never found Target useful for hardware or automotive---even 20 years ago these were areas with chronic out-of-stocks as well as limited selection. That's what K-Mart was for, although you sometimes had to sort past the cheap house brand stuff. Cars need much less routine maintenance than in the past, the design of engines and other components make it more difficult to do it yourself and electronic technology has eliminated or changed things like tune-ups. That may be why Pepboys is leaving the parts business and traditional indie parts stores have been disappearing for years, but overall it is just going to keep declining for everyone. I'm surprised Target has kept as much of the hard lines as they have. If they're tailor merchandise to a store, they'll do it based on their range of typical SKUs. They didn't takeover that location to be KMart.

Hardware stores hold on for a reason--if you need a specific wrench or a furnace filter, they're likely to have the one you want.

I took a look at the reviews for Jackson and the most negative reviews on Google are from before the store opened---probably the old KMart.
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