Target stores look different these days _ and that_s because target has become a vastly different company – the washington post

17622-yakrit-plihantak-churna-130618040918-phpapp02-thumbnail-3

By Sarah Halzack November 9 Follow @sarahhalzack

At the new Target store in Rosslyn, there’s evidence everywhere of the big-box chain’s efforts to make itself relevant again.

There’s plenty of cycling gear — helmets, seat covers, tire pumps, reflective shirts — because Target has micro-tailored the selection for this Arlington, Va., neighborhood, which its research found is heavy on bike commuters. A display near


the entryway is stocked with the trail mix and freeze-dried fruit that store executives think health-conscious urbanites will want to snack on. And the first thing you see when you walk in is a pickup counter for e-commerce orders, because the retailer is betting that apartment dwellers might like this option better than having a package left on their doorstep.

Target — the nation’s sixth-largest retailer, with $73 billion in sales last year — has different-looking stores today because it is a vastly different company than it was just over a year ago, when it reeled from a slew of problems.

Its expansion into Canada — its first foray outside the United States — was a money-losing disaster. A major data breach had taken a toll on consumer trust. And perhaps most important of all, it had tried so hard to deliver rock-bottom prices to recession-scarred shoppers that it started to lose the personality and chicness that had devotees lovingly calling it “Tar-zhay” in the early 2000s.

For decades, Target and other large-format chains such as Wal-Mart and Best Buy stormed into suburbs and exurbs, opening thousands of stores and gobbling up more of Americans’ shopping dollars and, in turn, becoming something of an economic bellwether. But years of siege from ascendent e-commerce retailers such as Amazon. com — and the demise of chains such as Linens ’n Things and Borders — have made many analysts doubt the future of the format.

Store team leader Anna Dietz, left talks via phone with a customer near the online order pickup area. (Jahi Chikwendiu/The Washington Post)

Now, as shoppers swing into the holiday retail season, Target is trying to make a fresh case that a vast fleet of 1,800 bricks-and-mortar outposts is actually an advantage even as the explosive growth of mobile Web use is reshaping the way people shop.

So the chain, where some 30 million customers go shopping every week, is moving to spiff up its stores and turn them into pickup hubs and distribution centers for online orders. And u nder a new chief executive, Brian Cornell, Target is looking beyond its core customer base of suburban baby-boomer moms to appeal to millennial moms and dads, urban dwellers, and the growing Hispanic population. The retailer’s sales and traffic have been improving lately, a sign that these steps might be working.

[ The opportunity for retailers as Black Friday becomes less of a draw]

Target’s new strategy is no doubt a nod to an important demographic shift: Millennial shoppers today outnumber boomers and are expected to spend about $600 billion this year. Their preferences have been a key factor behind Target’s move to ramp up its selection of organic food and products with “natural” in the label.

“It really, I think, occurs when moms have their first child and begin to become almost zealots for ‘All right, what’s in the product that I’m serving my child?’ ” Cornell said in an interview at the company’s Minneapolis headquarters. “We see rapid shifts from conventional to organic baby food, but then it continues across category. ‘Light,’ ‘diet,’ ‘lean,’ ‘fat-free’ have been now viewed as code for ‘There’s a lot of artificial ingredients there.’ ”

Target has expanded its Made to Matter line, a collection of organic snacks, cleaning products and beauty items. It is conducting tests on its wellness-oriented grocery assortment, and executives have said shoppers are likely to see changes in this category next year.

Reaching millennials has meant not just rethinking product offerings but also venturing into the urban hubs where many of them have opted to live. In October, Target opened four of what it calls flex-format stores, smaller outposts that have a limited merchandise selection compared with a traditional Target. (These used to be called TargetExpress or City­Target stores, but recently they’ve all been rebranded Target.)

The Rosslyn store is one of these smaller stores, which executives expect many shoppers will use for fill-in trips instead of major stock-ups.

That’s exactly what Lisette ­ Gallegos, 24, was doing when she stopped by on a recent Friday morning to grab a couple of bottles of white wine for her office’s Halloween-themed potluck. Gallegos said she’s been coming to the store frequently since it opened near her workplace several weeks ago, picking up office supplies or even lunch.

The assortment may not be big, Gallegos said, but “it’s basically everything you would need in a Target.”

Because the merchandise selection can’t be as broad in a flex-format store, Target executives are trying to tightly curate it. For example, while the Rosslyn store carries an abundance of cycling gear, that’s not the case in the St. Paul, Minn., flex-format store, which devotes lots of shelf space to toys and baby products.

This localized approach to assortment is one that Target is piloting for its bigger stores in hope of ginning up more sales. It could be an especially relevant tactic in reaching Hispanic shoppers, who had $1.4 trillion in buying power last year. Target recently has wooed the group by running Spanish-language ads during the hit CW comedy “Jane the Virgin,” signing up former Univision host Rodner Figueroa as a “style ambassador,” and having Hispanic millennial moms serve as “the creative muse” for a major marketing campaign for baby products.

Target says part of its struggle in recent years was that the stores weren’t merchandised well, meaning they didn’t have enough desirable items and weren’t showing them off in an enticing way. And so that’s why shoppers may have noticed some changes this year as they wandered through the aisles at their local store: The clothing, once confined to cluttered racks, is often styled into trendy outfits and displayed on brightly lighted mannequins. At hundreds of its locations, the home section has Pinterest-worthy living – or dining-room setups, much like at Pottery Barn or West Elm, meant to spark decorating ideas. In the cosmetics aisles at some stores, a “beauty concierge” awaits to help customers pick out a face cream or a lipstick.

When Target executives talk about these efforts, the word they use again and again is “inspiration”: They are trying to turn a trip to the store into more than a routine errand.

Target is focused on getting the merchandising right in what Cornell has dubbed the store’s “signature categories,” which include the fashion, home, baby, kids and wellness departments. Cornell would be the first to acknowledge it’s a Retail 101-type change, but it seems to be working: Sales were up more than 7 percent in the most recent quarter in the signature categories, compared with 2.4 percent for the retailer overall.

[ Wal-Mart and Target announce plans to win your holiday shopping dollars]

But better store displays won’t do much to stem the tide of consumers who are taking their shopping online. So far, Target has not been a heavyweight in e-commerce. In fact, a paltry 2.7 percent of its total sales last quarter took place online.

Now Target is trying to figure out how to reposition its massive stores to help with its fight to become a more serious digital retailing force. More than 450 outposts serve as fulfillment centers for online orders, meaning store employees walk the floor with carts, picking online orders and then packing them up and sending them off to nearby customers. Target has dramatically cut its shipping time, according to data from the customer service research firm StellaService, and this logistics change probably explains why.

Target is also trying to find ways to incorporate customers’ constant swiping and tapping on smartphones into their in-store shopping experience. That includes testing a technology that would be embedded in ceiling lights that communicates with shoppers’ phones to deliver highly customized offers and other information.

Analysts say Cornell, a veteran leader who came from PepsiCo and previously served as chief executive of Sam’s Club, has brought new focus to Target.

“I think he’s done an outstanding job so far — but some of it was easy, low-hanging fruit,” said Brian Yarbrough, a senior research analyst at Edward Jones.

Yarbrough said many people outside the company thought Target would benefit from reinjecting more of the stylishness it had become known for.

But Cornell has also made some tougher choices, including shuttering that struggling Canada business and slashing jobs at headquarters.

This perception may help explain why investors seem more bullish on Target than on its chief rival, Wal-Mart. In the past year, Target’s stock has risen 25 percent, while Wal-Mart’s has fallen 25 percent. Target’s Bentonville, Ark.-based rival has seen essentially flat revenue in the past two quarters and has projected higher costs. Wal-Mart has lately been taking its fight to Amazon in an especially direct way, answering the e-commerce giant’s massive Prime Day sale with a giant deals bonanza of its own. Target opted not to wade into that summertime retail battle royal.

“It’s easy just to follow your competition,” Cornell said. “It’s really, for us, more important to make sure we’re differentiating ourselves.”

(Amazon’s founder and CEO, Jeffrey P. Bezos, owns The Washington Post.)

Sarah Halzack is The Washington Post’s national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economic news.

Post Contributor Badge

This commenter is a Washington Post contributor. Post contributors aren’t staff, but may write articles or columns. In some cases, contributors are sources or experts quoted in a story.

More about badges | Request a badge

Comments our editors find particularly useful or relevant are displayed in Top Comments, as are comments by users with these badges: . Replies to those posts appear here, as well as posts by staff writers.

All comments are posted in the All Comments tab.

Comments our editors find particularly useful or relevant are displayed in Top Comments, as are comments by users with these badges: . Replies to those posts appear here, as well as posts by staff writers.