First TargetExpress opens its doors in Dinkytown near U

Super-sizing in retail is so yesterday. Instead, Target is going even smaller with its new store formats.

The Minneapolis-based retailer will open a 20,000-square-foot TargetExpress store in Dinkytown Wednesday, the first of its kind for Target at about a sixth of the size of traditional locations.

"We're testing things on an ongoing basis," said Kamau Witherspoon, Target's senior director of store operations, while offering a sneak peek earlier this week. "This is just our latest innovation."

The prototype feels like a drugstore along the lines of a CVS or Walgreens, but has its own Target flair with merchandise that includes groceries, bedding, smartphones — plus a healthy dose of Gophers fan gear.

After years of going big in the ­suburbs, Target is increasingly eyeing opportunities in the urban core following population growth in those areas. So far, only about 11 percent of its stores are in urban areas, but in 2012, it began testing an 80,000- to 100,000-square-foot store format called CityTarget, to appeal to the urban shopper. Now there are eight CityTargets in cities such as Chicago, San Francisco and Portland, Ore.

While Target's bigger stores are more suited for customers who want to stock up on food and other essentials, CityTarget and TargetExpress are aimed at shoppers picking up fewer items.

"Our urban guests are on the go," he said. "They are more focused on immediate consumption rather than stocking up. They want to get in and get out."

He added that Target moved much more quickly to open the first TargetExpress location. The store took less than a year from conception to opening day, compared to about two to four years for a traditional Target store.

The Dinkytown TargetExpress, which includes a pharmacy, has a subset of items sold at a typical store.

Aside from basic socks and underwear, it doesn't have an apparel section. Nor does it have furniture or patio sets. But it does have a full-size beauty department, along with the retailer's fairly new beauty concierge service.

Since urban customers often have smaller households and are looking to fulfill immediate needs, the store sells more single items or those in small multiples.

"We know that they don't need a 36-pack of paper towels," Witherspoon said.

"I guess that's what the students refer to as a snack," Witherspoon said, laughing. "So we have tons of meal chasers."

Target's research also showed that customers were unhappy with the long lines and uninspiring offerings of other quick-trip stores, he said.

With those concerns in mind, TargetExpress is designed to have a central check-out queue aimed at getting customers through the line faster to one of four registers. It lowered the heights of shelves so customers can more easily see the whole store. And it includes items not always found at stores of this size, such as towels and back-to-college items.

TargetExpress also has a strong value and technology focus. It's the first Target store to feature prominent space at the end of some aisles to highlight merchandise featured on Cartwheel, the retailer's popular savings app. And the store is stocked with a higher percentage of Target's private-label brands as part of a strategy to offer lower prices.

And if customers don't find what they want, they can search for items on iPads throughout the store. Customers can then scan the bar code for that item and purchase it from Target.com directly from their smartphone.

Rachel Wagner, who works down the street, peeked inside the windows of the Target­Express earlier this week. She said she's been looking forward to having a place nearby to get basics such as aspirin or healthy snacks, even if it's not an independent business as she had hoped.

"But it's not Wal-Mart," she said. "We're all pretty Target-friendly around here."

Target's experimentation with smaller stores comes at a time when Wal-Mart is aggressively building more of its smaller-format locations. It already has 350 Neighborhood Markets, which are 38,000 square feet on average, and 20 Wal-Mart Express stores, which are 12,000 square feet.

Wal-Mart executives have been so pleased by the stores that they accelerated the rollout plan and now expect to open 270 to 300 more smaller-format stores this year, while also opening about 115 supercenters.

"Wal-Mart invented the supercenter," said Faye Landes, an analyst with Cowen and Co. "It has [thousands] of them and is now stressing smaller stores. That's an important part of the picture here."

"So they are leading the way," she said. "Given Wal-Mart's actions, everybody has to react more quickly. "

The rapid expansion of dollar stores also has been putting pressure on big-box retailers as more consumers gravitate to them for fill-in trips, said Brian Yarbrough, an analyst with Edward Jones.

"These dollar stores have been taking share from the Wal-Marts and Targets of the world — more so for Wal-Mart," he said. "Target hasn't talked about it as much, but I would assume they are seeing some of that, too."

At the same time, he noted that after years of rapid growth in suburban areas, there aren't a lot of expansion opportunities left for retailers such as Target in those markets, he said. So the urban centers have more potential.

But CityTargets are still pretty big and so it can be tough to find spaces for them in urban areas where large chunks of available real estate are hard to come by. So Yarbrough sees the much-smaller TargetExpress stores as a more promising venture.

Kavita Kumar • 612-673-4113