Marie Wiere's Blue Sky Management Blog

A week ago I moved to Reno, NV and am now 15 – 20 minutes walking distance from downtown’s river walk district.  I am already enjoying being able to walk to restaurants, a movie theater and other nearby entertainment options, as this is what I was used to growing up in Europe.  According to a recent issue of BusinessWeek for the first time in twenty years there is a US nationwide trend of cities growing faster than suburbs.  Many people are choosing to move into cities, a reversal of the 1960’s urban exodus.  One company looking to take advantage of this trend is big box retailer Target, who are experimenting with smaller stores in city centers.

Target has traditionally focused on suburban communities to drive revenue growth.  However, shifting demographics and the current economy has led to smaller revenue growth.  Indeed, before the recession hit Target added 22 new stores on average each quarter, a figure that has fallen over time, as evident by only one new store being added in the first quarter of 2011.  Target hope to drive revenue growth through exploring a smaller city center store concept and by embarking on international expansion into Canada.  The company’s goal behind these endeavors is to increase revenue by 40%, to $100 billion by 2017.

Target’s smaller store concept has been named  “CityTarget.”  The stores will be about two-thirds of the size of a regular Target box store at most; some may even be smaller.  Target Executive Vice President John Griffith, believes many city dwellers currently traipse to their suburban locations to take advantage of their low price designer lines:

“It’s like we’ve been dating long distance…  Now we’re going to be right in their backyard.”

A preview of the Chicago CityTarget one month prior to opening

The new CityTarget stores will have a redesigned layout to appeal to city dwellers.  Product selection will also be different, there will be smaller packaged goods options to target customers shopping without cars, a fresh foods section and some product lines such as outdoor furniture will not be available.

The first CityTarget store will open in Chicago in late July, with other planned locations in Los Angeles, San Francisco and Seattle expected to open later in the year.  The company hopes to create a “cooler” version of a Target store that is differentiated from department stores.  Target are pursuing a slow growth model for the concept, with less than ten stores planned for the next year.

I believe the CityTarget concept has the potential to be a success, as it’s an affordable store with appealing products, but what do you think?  Share your thoughts in the comments section below.