* First CityTarget stores open July 25
* Smaller trucks, back rooms designed for urban stores
* Wifi, Apple displays among features in new shops
By Jessica Wohl
CHICAGO, July 18 Target Corp is tweaking
its playbook to appeal to city dwellers and others who already
shop in busy downtown locations as it tries to boost sales
growth in a weak U.S. economy.
The first slimmed-down CityTarget stores will open in late
July after two years of planning that included talking to
shoppers, creating slimmer checkout lanes and testing how to use
smaller back rooms for deliveries.
Big box retailers like Target and Wal-Mart Stores Inc
have been looking for ways to reach more customers in
tighter urban locations. But unlike Wal-Mart's smaller Walmart
Express shops, which focus on groceries and other basic goods,
CityTarget will carry everything from jelly to jeans.
The first CityTargets, which are about two-thirds the size
of a typical Target, open on July 25 in Chicago, Los Angeles and
Seattle, where the company already is already well established.
CityTarget gives Target a chance to learn how to operate in
existing locations that are smaller than its typical stores,
knowledge that should help the Minneapolis-based chain as it
gets ready to open its first Canadian stores in 2013.
"The Canada team and the CityTarget team talk almost
weekly," said Mark Schindele, senior vice president of
merchandising, as he walked around the Chicago store.
The average size of a CityTarget is about 80,000 square feet
to 100,000 square feet, Schindele said, compared with Targets
that average 135,000 square feet and Super Targets that are
about 175,000 square feet.
Target has been working for almost two years on fitting into
smaller spaces. It roped off parts of the back rooms in three
stores in Minnesota, New Jersey and California to test how to
handle deliveries and storage with less space and came up with
new signs and displays to have a more sleek, urban look.
Trucks delivering goods to CityTarget are six inches shorter
than usual to fit into tight spaces such as under the elevated
train tracks in Chicago. The trucks also measure 28 feet long,
significantly smaller than the typical 53-foot trucks Target
uses, Schindele said.
The Chicago store is housed in a 113-year old historical
landmark constructed by architect Louis Sullivan in the heart of
the city at the corner of State and Madison Streets. Nearby
retailers include H&M, Forever 21, Office Depot,
Nordstrom Rack, Sears and T.J. Maxx.
CityTarget stores are more expensive to operate and build,
as they are housed in pre-existing spaces, Schindele said. In
Chicago, for example, Target had to rip out old floors and strip
dozens of coats of paint off of columns to give the store the
CityTarget shelves are bright white rather than
almond-colored. Mannequins, tested in one Target store, and
brushed silver racks are used to display clothing. In a first
for the Target chain, music plays in the Chicago and Seattle
That focus on design is one thing that can set Target apart
"They're very good at profitably co-existing with Walmart,
but they're also good at trying to figure out what they can do
that the competition can't really do well," said Barclays
analyst Robert Drbul.
The two-level CityTarget in Chicago is roughly eight times
as large as Walmart Express stores in the city and will sell
everything from food to 60-inch televisions.
CityTarget is also part of a test of special areas for
selling Apple Inc devices. Each CityTarget has wifi,
letting shoppers test iPads and browse for items not in the
Target has eliminated some goods that would not appeal to
urban dwellers, such as lawn fertilizer and large furniture. In
scaled back sections such as baby goods and electronics,
shoppers can scan codes with their mobile devices to see
Target's full selection and order online.
Later this year, another Los Angeles store and one in San
Francisco will open, followed by a third Los Angeles location
and a CityTarget in Portland, Oregon, in 2013. Target has not
said yet where it may open other CityTargets.
"We're in talks with pretty much every major city," said
Expanding and enticing shoppers to spend more are critical
for Target. While its sales growth outpaces that of Walmart,
recent measures such as June sales at existing stores came in
below analysts' expectations.
On Tuesday, Citi Investment Research analyst Deborah
Weinswig cut her rating on Target to "neutral" following a
disappointing U.S. Commerce Department report on U.S. retail
"If they can get this right that will be very interesting to
watch," said Drbul.
(Editing by Steve Orlofsky)