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Column:
Target shoots for retail comeback, and Chicago area is on front line
By Robert Reed
Beleaguered retailer Target Corp. is counting on the Chicago area to help trigger its revival and rescue the company.
Under attack from giants Amazon and Walmart, Target is fighting back by opening a raft of mini-stores in area neighborhoods. Each is no larger than 40,000 square feet, compared with Target's 175,000-square-foot superstores.
By 2018 the chain is expected to have at least 10 mini-stores, about 7 percent of the company's expected 130 small-store network, operating throughout select Chicago-area neighborhoods and more densely populated suburbs.
While this slimmer shopping concept won't single-handedly defeat the competition, the approach is an essential component of Target's multibillion-dollar about-face. That effort also includes sharpening its online strategy, refurbishing many of its huge stores and, Target management hopes, greatly improving earnings.
Target opening downtown Evanston store next year
The new Evanston store, slated to open in March 2018, will be Target's ninth Chicago-area small-scale store.
By Lauren Zumbach
Full disclosure: I am a sucker for a good business comeback story and, right now, Target's plan is just unfolding. Household names Apple, Starbucks and Netflix suffered serious rough patches and went on to thrive, so maybe Minneapolis-based Target will do the same even in an era when many renowned retailers — think Macy's or Sears — are reeling.
"It is too early to call Target's turnaround strategy successful, but we believe it's a directionally correct strategy," John Brick, a Morningstar equity analyst, said in an email to me.
The Chicago market is at the vanguard of Target's line of attack.
Right now, Target's self-described "small-format" stores are up and running in Chicago's Loop, Streeterville, Lincoln Park and Hyde Park neighborhoods. Later this year, four more will open — in Oak Park and Skokie and two in Chicago's Lakeview neighborhood. For 2018, downtown Evanston and Rogers Park will get tiny Targets.
These stores are tucked into densely populated communities with nearby apartments, condos, public transportation hubs, downtown centers or universities.
They are trimmed-down versions of Target's flagship superstores, offering abridged versions of the mainstay lines of apparel, food and beverages, office supplies, housewares, hardware and electronics.
I recently visited the Streeterville Target, which opened in late 2015, and it looked well-stocked and determined to meet the immediate needs of city dwellers and millennials, especially those pressed for time.
Flanked by an adjoining CVS store and a Starbucks cafe, this smaller Target has a respectable assortment of household and personal items on display throughout its one-floor, street-level storefront. There was even a decent array of affordable wines.
The sales and checkout crews were friendly and helpful.
Yet on the weekday when I visited, some of the store's casual clothing was strewed about, which made the apparel section look more like an open-air bazaar and not a neat, upscale marketer.
That's something Target management will need to keep an eye on and correct.
Aside from catering to walk-in traffic, the smaller outlets are designed to double as neighborhood pickup sites for Target's online customers.
When it comes to digital, Target is a laggard that needs to get going if it's going to be an online power, not a pretender.
Last year it rang up only $3 billion in domestic online sales, compared with $16 billion for Walmart and $55 billion for Amazon, according to Morningstar.
Can Target return to the glory days of selling cheap, cheerful and chic products?
I'd say yes.
One significant reason is the Target brand still enjoys a lot of customer goodwill.
Target's Streeterville store is an example of the small-format, urban-oriented outlets the company hopes will help boost its fortunes. (Phil Velasquez/Chicago Tribune)
The same was true of Apple, Starbucks and Netflix, which have all been through periods of widespread customer unhappiness and corporate retrenchment. These companies came though the downturns because consumers were open to giving them another chance.
My impression is that shoppers are frustrated with Target's spotty merchandising performance, especially when it comes to selling groceries, but they haven't completely rejected or given up on the retailer.
Whatever happens, Chicago-area shoppers are going to play an important role in Target's future.
roreed@chicagotribune.com
Twitter @reedtribbiz