Target is working to pump up sales after reporting its first decline in two years and seeing shares drop more than 13% this past year. With a new strategy in place, Target hopes to drive sales by connecting with a new shopping demographic
Small Stores for Target, Will This New Strategy Work?
Target is one of the largest big box retailer stores in the world. The company has over 1,800 stores throughout the nation. But after reporting a decline in sales for the first time, how does the retailer respond? Target's new strategy is one other big box store ran away from.
Instead of more big box stores, Target is shifting its focus to small box stores. This new strategy is one tried by another familiar big box retailer: Walmart. Yet Walmart tried and decided against pursuing their “Walmart Express” stores.
So what's the difference? Will Target's approach hit the bullseye?
Where Walmart tried to pack everything into small stores to appeal to everyone, Target is opening stores a fraction the size of their usual stores, with a focus on millennials. Stores will be built in heavily populated college cities with a strong focus on college lifestyles. Beer and ping pong balls. Twin sized sheets. Art. Ready made meals. What there WON'T be in the new Target stores is family shopping. No toys for children or family games.
Target is doing its best to compete against Amazon and other online retailers and marketplaces. Online sales accounted for more than a third of total retail sales growth in 2015. By focusing on college cities rather than densely populated cities with high cost of rent, Target is connecting with a much coveted demographic without breaking the bank. And by utilizing less space, Target invests less in inventory, hiring, and operating costs.
With less costs and a more engaged user base, Target has a winning formula.
Learn more about this news when you watch this video from Bloomberg.
Target's new plan looks like a bullseye. As stores go up, expect Target (TGT) shares to go up, too.
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