Target Corp. is shelling out $250 million to spiff up stores in its backyard to keep them relevant in the digital era.
The Minneapolis-based retailer will give top-to-bottom makeovers this year to 28 stores in the Twin Cities, or about half of its footprint in the region. It’s the largest investment the company is making in any single market this year as part of a $1 billion-plus effort to refurbish about 325 stores around the United States.
“We love our hometown,” said Mark Schindele, Target’s senior vice president of properties. “Our friends and family shop here. It’s one of our most important markets in the entire country. We also have some older SuperTargets here, so it was time for an update.”
The improvements include a more prominent counter to pick up online orders, a “trend spot” near the entrance showcasing seasonal home goods and apparel, more self checkout lanes, new produce bins and grocery displays and an elevated beauty department. Stores also will get a new look and feel with updated flooring, LED and specialty lighting, more neutral (and less red) colors, and upbeat music streaming throughout.
And, after testing the concept last year, remodeled Target stores this year will feature a nursing room to better cater to one of its key demographics: young families.
In the Twin Cities, Target also plans to add 10 liquor stores on top of the eight it has already opened in recent years.
“In the past, when we remodeled, we might have just upgraded the fixtures,” CEO Brian Cornell said while walking through the Nicollet Mall store next to headquarters, which got a $10 million renovation last year and will be a blueprint for this year’s remodels. “But this is dramatically different from anything we’ve done in the past.”
Store renovation is one of the pillars of Cornell’s playbook to revive Target’s sales, which have slowed in recent years, as it faces formidable competition from Amazon and Walmart. Target laid out a strategic plan last year that calls for spending $7 billion over three years to not only refresh stores but also its private-label apparel and home brands, plus open more small-format urban stores and enhance its website and supply chain.
Executives will share more details about its strategy at an investors meeting Tuesday in Minneapolis.
After testing many of the new features at its Quarry store in northeast Minneapolis and in several stores in Los Angeles, Target remodeled 110 of its 1,800 stores last year, including locations in St. Louis Park and St. Paul’s Midway.
Once it confirmed the changes were leading to a 2 to 4 percent sales lift as hoped, executives accelerated their plans to renovate more than 1,000 stores by 2020.
The effort, Cornell said, has drawn more traffic to stores and encouraged shoppers to spend more.
“It brings shoppers back in,” he said. “They’re shopping more often. They’re discovering new parts of the store. So it’s increasing both traffic and basket size.”
The physical changes are intended to complement other initiatives such as more concierge-style service in various departments and the new apparel and home brands the company has introduced.
“You don’t want to put these shiny, new brands into musty, outdated environments,” said Carol Spieckerman, a retail consultant. “Those stores are a canvas for those new brands.”
While many retailers have been focused on raising their online game in order to survive the digital shift, she said, it’s wise for Target to also concentrate on its stores since many people still enjoy the experience of shopping in them.
“The stores are where Target built loyalty,” she said.
By paying more attention to the physical presentation, Spieckerman said Target can push to make its grocery department, which has been a weak spot, more appealing.
Target’s store redos are not as radical as the cashier-less stores Amazon is trying out. But Spieckerman said the refreshed stores help Target set the stage for incorporating other new technologies — like augmented and virtual reality — into its stores down the road.
Target weighs a number of factors when deciding which stores to revamp such as age, condition, volume and growth potential. Stores across the country were chosen in the first round of remodels, but Target paid special attention to Dallas last year where it spent $220 million to refurbish 28 stores. Like the Twin Cities, Dallas also had a number of aging SuperTargets.
While executives said they didn’t see a bigger sales jump as a result of that total market approach — compared to individual remodels elsewhere around the country — they said focusing on a specific region helped build more excitement.
“Neighbors talk,” Schindele said. “‘Did you see what happened at my new store?’ If their store isn’t remodeled, it can be disappointing, like ‘Oh, I wonder when they’re going to do my store.’ ”
By focusing on a market, it also helps regional store teams and general contractors so they don’t have as much of a learning curve with each project, he said.
Five remodels are already underway in the Twin Cities. The others will start in waves in coming months. Construction generally takes three to five months, depending on the size of the store.
Joe Contrucci, who oversees Target’s stores in the Midwest, acknowledged customers might be frustrated when items get moved around temporarily during the renovations. So each store will have “brand ambassadors” whose main task will be to help guide customers.
“Just look for people who look like they’re looking for bread,” he said.
In the Twin Cities, 19 of the 28 stores getting upgrades are SuperTargets. So those remodels will be around $10 million each, compared to $5 million for the more typical-sized stores.
The remodeled SuperTargets, which already have two entrances, will closely resemble the dual-entry next-generation prototype store Target opened outside of Houston in November. In that design, one entrance is focused on inspiration around its home and apparel offerings while the other is centered around convenience with grocery, pickup and a gift-and-go section near the doors.
Those stores will also have more department store-like displays where items are cross-merchandised to create vignettes, such as a recent one in the kids’ section that highlighted Star Wars-themed toys, games, bedding and clothing in one place.
Some of the local stores haven’t been updated in about 15 years, Schindele said. Target’s plan is now to refresh them at least once a decade.
As for the rest of the stores in the Twin Cities, he said they’ll get remodeled as well.
“Our goal between now and 2022 is we’ll be able to hit the great majority of them,” he said.