In an effort to stay relevant, Target is going back to its roots.
Born as a discount offshoot of the Dayton-Hudson department store in 1962, the retailer has always had a more fashion-focused approach to the bare bones, utilitarian big-box store.
But with online retailers such as Amazon breathing down its neck, the Minneapolis-based operator has been borrowing more pages from the department store playbook to give customers a reason to visit the store and to keep them coming back.
In recent years, it has been doing things such as adding mannequins to its clothing departments, rolling out beauty concierges to offer advice on makeup and face creams, and breaking down the high walls in its home decor aisles and replacing them with displays that mimic how items might be laid out in a home.
Last fall, Target hired 1,400 visual merchandise leaders, or one for nearly each of its 1,800 stores, to focus on dressing up store displays. It's a move that has already started to pay off.
"It's probably one of the best decisions we've made in years," Chief Executive Brian Cornell told the Star Tribune earlier this year.
Now Target is taking it one step further with new in-store presentations and enhanced customer service offerings it is testing in 25 Los Angeles-area stores in an initiative the company has dubbed "LA25."
At those stores, Target has brought together about 35 small- to medium-sized innovations — some of which have already been rolled out to a handful of other stores — to see how they perform in concert with one another and whether it has an impact on sales.
The final remodeling touches were completed last month, including at Target's Quarry store in northeast Minneapolis, which also received all of the updates.
The changes, such as adding service advisers to roam the aisles to aid customers and adding mannequin busts in Target's C9 activewear department, are not revolutionary. But taken together, they provide a glimpse into how Target is looking for its stores to evolve.
Some of the most dramatic elements are near the front entrance. Instead of greeting customers with discount bins, Target has set up an Americana-themed display for Memorial Day with mannequins sporting red, white and blue outfits for the whole family, patriotic accent pillows and candles, and picnic baskets and coolers.
"We set out to create a more inspiring welcome for guests when they first walk in," said Mark Schindele, Target's head of properties, as he dodged shopping carts during a tour of the Quarry store.
The idea, he added, is to always highlight a style moment in apparel or home goods that mimics the feel and function of department store windows.
Such a display is a departure for big-box stores like Target that always have focused on maximizing shelf space and keeping costs down.
"We've been set up for efficiency for so long," Schindele said. "It's hard to break that mold."
As part of the tests, the lighting has been overhauled to make the stores brighter and more inviting. LED lights have replaced fluorescent ones, and track lighting has been installed to highlight the front-of-store display as well as the revamped produce department, which is now housed in new wood-grain bins.
There's also a lot less of the iconic Target red in the store. Many of the red walls have been painted gray, giving the stores a more modern, contemporary look against which the products more easily pop out.
"In the past, every wall where you could paint we painted it red," said Schindele. "Now we're using it more for accents rather than the dominant color."
Competitive opportunity
Sandy Stein, the Twin Cities-based author of "Retail Schmetail," said the updates are straight out of "department store 101" and are a wise move for Target.
Once the kings of the retail world, department stores have fallen on hard times as mall traffic has dwindled, customers have been lured away by off-price retailers like T.J. Maxx, and millennials have chosen to spend their money on travel and concerts instead of clothes.
"A lot of department stores are racing to the bottom and are trying to cut costs and focus on off-price," said Stein. "I think Target is being very smart by picking up and moving the experience up rather than down."
Not only is Target likely taking away business from Macy's and J.C. Penney, he added, but the changes also help differentiate Target from other big-box stores. On top of that, they make the store experience more special at a time when customers are tempted to skip the store altogether and to shop via smartphones from the comfort of their home.
Amy Koo, an analyst with Kantar Retail, said Target is getting tugged in multiple directions.
It's being pushed on price by Wal-Mart. At the same time, it always has had a more aspirational brand image more akin to a higher-end retailer. It is telling, for instance, that Target just plucked its new chief merchandising officer, Mark Tritton, from Nordstrom.
"Target has always been trying to have it both ways, and it's hard to keep having it both ways," said Koo. Companies will have to prioritize and make tough choices as they face higher labor and overtime costs, she added.
Target will closely monitor the results of the LA25 test as it decides which aspects to roll out to the rest of its fleet as it begins to ramp up the pace of store remodels. It plans to refresh 39 stores this year, up from nine stores last year. In 2017, Target will remodel more than 100 stores.
While many of the new initiatives hearken to a department store ethos, Target is also going forward with other initiatives aimed at efficiency, such as adding self-checkout lanes to another 500 stores this year. Target first tested them in 2010 and will have them up and running in 1,200 stores by the end of this year.
Other parts of the tests include a revamped customer service desk that more clearly signals that it is the place to pick up online orders. It also has more space behind the counter where employees can hold online orders so they don't have to run to the back of the store to fetch them.
New service advisers
As part of the LA25 test, a few service advisers have been added to each store to walk around with a tablet and a smartphone. At the Quarry store, Randall Davidson often patrols the furniture department, where Target is experimenting with displaying items such as a bed that can only be purchased online.
"I look for people who are going like this," Davidson said as he swerved his neck from the left to the right.
Recently, a customer wanted to buy some bar stools that were on display but available only on Target.com, but she did not have a credit card or a computer. So Davidson walked her through a convoluted process of using cash to buy gift cards, which they then used to place the order on his tablet.
"Eventually, we got to be good friends, because it took a long time getting this thing to happen," he said. "So now she knows me as Randall and she said next time I want to come to talk to you."
The LA25 test stores also have extra visual merchandisers and more staffing to give general tech advice in electronics through the help of an outside partner, Market Source.
While these tests are notable, some critics note that they are still incremental and contend that Target needs to more radically transform its box in order to compete in an increasingly digital world.
To that end, the retailer is working on a next-generation prototype that is three to five years out. And then there is a more futuristic "concept store" with robots that the retailer is also tinkering with.
"This is sort of like the here and now," said Schindele, the Target executive. "But we're always working on the next thing. We always have those ideas percolating."
Kavita Kumar • 612-673-4113
