Target Sees New Smaller Manhattan Store as Where It’s Headed

Target sees its new smaller store in Manhattan as a symbol of where it’s headed. The store opening Friday, which is about one-third the size of its average store, will offer same-day delivery and a selection of products more tailored to the local market.

The Herald Square store a block away from Macy’s is one of 12 mostly small-format stores opening this week in urban markets like Chicago, Los Angeles and Philadelphia. Target opened its first-small-format store in Manhattan a year ago, and currently operates 38 nationwide and plans to open 130 more by 2019.

CEO Brian Cornell says sales per square foot at small-format stores in urban markets and college towns are twice that of regular stores.

The company started testing same-day delivery at a store in Manhattan this past summer, letting shoppers have their purchases made in the store delivered to their home for a fee. Cornell says shoppers are spending six times more than the average shopping basket at that store when they use the same-day service. It plans to start same-day delivery service at two other stores in Brooklyn on Friday. Cornell says he envisions that Target will expand same-day service to other urban markets.

Like many retailers, Target is trying to appeal to shoppers who are spending more online.

Target is spending $7 billion over three years to remodel old stores, open small ones in cities and college towns and offer faster delivery for online orders. It is also adding more clothing and furniture brands, and said that its children’s line Cat & Jack brought in $2 billion in sales since its launch a year ago.

Cornell said Thursday that the remodels have been well-received and the company is accelerating plans to remodel 1,000 of its 1,800 stores by 2020, up from the original plan of 600.

Target has raised its minimum hourly wage for its workers to $11 and will increase it to $15 by the end of 2020. It says that will help it better recruit and retain top-quality staff and make shopping at Target a better experience.

The company is also testing store-curb pickup for online grocery customers at some stores in the Minneapolis area. In comparison, Walmart has 1,000 stores that offer curbside pickup for online grocery shoppers and plans to double that figure next year.

Target’s two-level Herald Square store offers 16 self-serve checkouts because it anticipates high commuter traffic. It has a small grocery area near one entrance so shoppers can quickly grab a banana or a sandwich and leave quickly, and a larger grocery area is on the lower level.

It’s the first to sell Target-branded merchandise like mugs and T-shirts emblazoned with the Bullseye mascot. And Target is using the location to refine its strategy of offering a specialty-store feeling.