Target To Build Bigger Stores To Double Down On Same-Day Deliveries

Target is shifting its retail strategy to focus on larger store sizes in order to best meet its same-day fulfillment goals.

Target is planning to shift its real estate strategy by focusing on larger-format stores at nearly 150K SF, the company announced Thursday. The new designs will be around 20K SF larger than a standard Target and feature a more open layout and more space for customers to drive through and pick up their online orders, according to its release.

"Target's stores are at the heart of how we deliver for our guests, whether they browse the aisles, shop online or stop by for same-day services like Order Pickup and Drive Up," Target Chief Operating Officer John Mulligan said in a statement. "With our reimagined store design and larger store footprint that better supports our same-day services, we can give guests more of what they love while incorporating features that build on our commitment to sustainability, community and helping all families discover the joy of everyday life."

The new format will be the largest component of the Minnesota-based retail chain's growth over the next few years, even as it continues to open stores of all sizes. Target's ability to meet its online orders has dominated its focus lately, and it opened several sortation centers this year and last, following the success of its pilot program at an almost 400K SF facility in Minneapolis.

Last year, the company announced it was planning to spend $4B per year for the next several years expanding and upgrading its real estate portfolio, as part of its aim to make use of the gains it has made over the pandemic.

The move to 150K SF locations marks a departure from its more recent store strategy, which began in 2017 and and was centered around smaller footprints. As part of the $7B reinvestment program, larger stores have been getting renovated, and Mulligan said in 2019 that each store that had been revamped saw a 2% to 4% boost in sales in the year following a renovation.

Target is one of the largest retailers adapting its real estate strategy to accommodate more curbside service, but it has been a fast-growing trend since the early days of the pandemic, when in-store shopping was restricted.