In response to declining foot traffic, competition from neighboring stores that carry similar products and other financial pressures among brick-and-mortar stores, many retail companies are closing stores to cut costs. In the first quarter of 2017 alone, Radio Shack, Payless and The Limited have each closed hundreds of locations.
While Target’s stock price has struggled with weaker than expected performance (its stock has tumbled over 30% since Black Friday 2016), the company isn’t closing any of its 1,800 stores. Instead, it’s investing in them. Earlier this year, the company announced a $7 billion initiative to improve its business—which includes major in-store changes: “We’ve got to re-imagine that store experience,” CEO Brian Cornell told investors in an earnings call earlier this month. “Today’s millennial shopper doesn’t enjoy shopping one of our tired stores that hasn’t been touched in 10 years.”
As many retailers look to new technologies to spice things up in-store, Target is looking at a more fundamental element to overhaul: its floor plan. The first of these “re-imagined” stores will open outside Houston, Texas in October 2017. The new Target stores will feature two separate store experiences: a move with major implications for the brands Target sells and for the future of the retail industry.
A Two Store Solution
Walking into a Target today, the aisle where you’d find Q-Tips looks the same as the aisle where you’d find shoes. But the shopping style for these items is very different (you’re not going to try on Q-Tips, after all), and Target’s redesign is focused on meeting those needs—so much so that the company is splitting its stores down the middle. A departure from standardized merchandise aisles that have uniform lighting, the new store will have two separate entrances that lead to two distinct shopping experiences. One half will be a “specialty store,” with curved, circular aisles of apparel, home goods and electronics that consumers can browse. Harsh fluorescents will be replaced by LED track lights that focus on giving each department more of a showroom look.
The second half of the store is designed to attract the grab-and-go consumer looking for groceries and other seamless purchase items (like Q-Tips). This half of the store will feature automated checkouts and nearby parking. Depending on the season, consumers can also find necessities like back-to-school supplies or Christmas cards in this section.
“It shows Target is placing their bet on the concept that shoppers wear many different hats,” says Ann Marie Luthro, a retail consultant in Portland, Oregon. “One day I could come in as a mom shopping for clothes, another day I’m on a lunch break looking to grab something and leave quickly.”
A Store Divided Against Itself?
Brands selling at Target may be concerned by the…