In its ongoing quest to reinvent itself, Target says it is thinking bigger about small stores. Not only will it open three dozen more of its smaller-footprint stores this year, it also intends to open its tiniest yet. At 6,000 square feet, it will be roughly half the size of its smallest location.
Target says the itty-bitty units, with the first scheduled to open next year, will increase its reach in urban and campus settings.
These smaller stores, which currently number about 100, generated $1 billion in sales this year.
The Minneapolis-based retailer made the announcement during an event to outline its progress on strategic initiatives for investors that had been scheduled to be an in-person event. Target hastily rescheduled it as an online conference, due to concerns about the coronavirus and business travel.
The retailer also announced plans to start testing fresh groceries for Drive Up and Order Pickup this spring, in Minneapolis. It’s also experimenting with the addition of those services for adult beverages in 100 stores in Florida and Oregon. It hopes to expand services for both kinds of products by the start of the holidays.
In an update on its extensive remodel program, the company said that with 300 scheduled for this year, it’s on track to have overhauled 1,000 stores by the end of the year. Remodeling boosts sales by an average of between 2% and 4% in the first year, and an average of 2% in the second.
It’s also testing a different layout for its front-of-store, which it says is more welcoming, complete with fresh flower displays, a curated product assortment and lower walls and counters.
The company also released its financial results for fourth quarter, using the occasion to tout its digital accomplishments. Among them? A digital sales gain of 20%, with same-day services (Order Pick Up, Drive Up and Shipt) accounting for better than 80% of that growth.
Total comparable sales grew 1.5% for the quarter, with revenue rising 1.8% to $23.4 billion. While that was a bit below Wall Street expectations, operating income did better than forecast, growing by 7.3% to $1.2 billion, up from $1.12 billion in the comparable period.