Target Corp. said it would expand plans to remodel its existing supercenters and open smaller stores in cities as the retailer seeks to win back shoppers in the competitive retail environment.
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At a media event Thursday, Target executives said they now plan to remodel more than 1,000 of its 1,800 existing stores by the end of 2020. Earlier this year, company executives said they planned to remodel 600 stores over three years, part of a $7 billion investment, including lowering prices and investing in e-commerce.
Chief Executive Brian Cornell said he is making "big commitments" to improving stores and expanding digital capabilities. "We're remodeling and across the street someone is closing the door," he said.
Mr. Cornell declined to say whether the new pace of remodels would increase Target's spending plan, saying he would provide an update at the next meeting with financial analysts. Sales have increased 2% to 4% at recently renovated stores, he said.
The company has remodeled 110 stores so far in 2017. It is opening 32 new stores in 2017 and 35 next year. Most of those new locations are smaller formats that the company is opening in urban areas and college towns. It is opening 11 such stores this week, bringing the total number of smaller stores to 55 so far.
Mr. Cornell is trying to turn around the retail chain's fortunes after it reported weak holiday sales last year and was forced to lower its profit and sales goals for the current fiscal year. Some of his moves, including lowering prices and remodeling stores, helped the company report a sales increase in the third quarter.
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The smaller stores will help Target as it seeks to balance shifting consumer habits, with more people shopping online. Mr. Cornell said such locations have been twice as productive as the company's traditional stores and have drawn new customers.
They typically have less than 50,000 square feet compared with the average Target store of 145,000 square feet. To maximize shelf space, Target stocks them with smaller package sizes and fewer brands for many of the same items offered in bulk at its larger stores.
Target is also customizing the assortment in the stores to cater to local tastes -- the new location in New York City's Herald Square, for example, sells city-themed clothes to appeal to tourists visiting the area. It is opening across the street from Macy's Inc.'s flagship store.
Mr. Cornell said the company is also focused on expanding delivery options by using its stores as distribution centers. Target plans to expand a new service across the country next year that would let customers fill up a box of household essentials and have it delivered the next day for a flat fee.
"The real battleground where we have to win is the last mile," said Mr. Cornell. "It's where we believe we can leverage our stores."
Rival Wal-Mart Stores Inc. said recently it would open fewer U.S. stores than it has in at least 25 years and deepen its cost-cutting efforts to free up cash for e-commerce and store improvements. Last week, Wal-Mart said it would only open about two dozen U.S. stores next fiscal year, but the discounter has been ahead of Target in remodeling its existing supercenters and ramping up its web business.
Meanwhile, Amazon.com Inc. has been pushing deeper into physical retailing. It acquired high-end grocery chain Whole Foods earlier this year and has struck a partnership with department store chain Kohl's Corp. that lets shoppers return Amazon goods at about 80 Kohl's locations.
Shares of Target, which have fallen 16% so far this year, rose 40 cents to $60.43 Thursday.
Write to Khadeeja Safdar at email@example.com
(END) Dow Jones Newswires
October 19, 2017 13:06 ET (17:06 GMT)