• by Sarah Mahoney  @mahoney_sarah, January 21, 2010

Target Corp. says it is spending $1 billion in the coming year to renovate its stores, scaling back its expansion plans. Much of the remodeling focuses on expanding what it calls its P-Fresh format, adding almost all of the perishable and food items now available primarily at its Super Target stores.

Stores that have been converted to this format typically have seen a 6% gain in comparable-store sales as a result, executives of the Minneapolis-based company say.

In a two-hour meeting with investors that was also Webcast, the company outlined other growth plans, including the development of a smaller-store format it plans to test in urban markets in the next few years.

In addition to the expanded grocery offerings, the renovation of about 340 stores will also include "enhanced layout, assortment, and in-store experience in a variety of other merchandise areas including beauty, home, electronics and video games," the company says.

In a two-hour meeting with investors that was also Webcast, the company outlined other growth plans, including the development of a smaller-store format it plans to test in urban markets in the next few years.

But it is also slowing its expansion rate, and says it will open fewer than 10 new stores this year, focusing instead on the remodeling.

The company says it plans to advertise and market the new formats as stores convert, and that it hopes to complete much of the work before the fourth quarter begins.

Michael Francis, EVP/CMO, also outlined some of the company's recent marketing achievements, including the successful relaunch of its Up and Up store brands, aggressive holiday advertising that fueled sales growth, and a concerted effort to boost multichannel integration.

For example, he says, its Gift Finder app for iPhones is nearly identical to the one on Target.com, and it has increased its use of mobile coupons. On the Web site, which he says will be completely redesigned in 2011, the Minneapolis-based chain has added shoppable videos. And the introduction of four-color coupons in store receipts is also "driving sales and conversions," he says, "motivating people to shop multiple categories."