Report: Target eyes smaller-format stores; expansion constrained by real estate availability

Minneapolis Target Corp. is looking at the option of opening smaller-format stores as a way to expand in cities and urban areas, according to a Bloomberg report.

Target plans to open more U.S. stores in metropolitan areas, as well as remodel existing locations, to add groceries and encourage more frequent visits. Tests at Target’s Atlantic Terminal store in Brooklyn, N.Y., and two or three other urban sites may help the retailer prepare for smaller formats, the report said. At those locations, Target trimmed the number of items available by as much as 25% by cutting certain sizes and colors of products to ensure the stores are well-stocked.

Target plans to open about 10 new stores next year, including its first in Manhattan, Bloomberg reported. In 2011, the discounter anticipates more openings, with the exact number depending on whether it can find the right locations and returns, the report said.

“The constraint in 2011 and 2012 is the availability of suitable sites,” Chairman and CEO Gregg Steinhafel told Bloomberg.

Ideally, the company would develop more than 100 stores annually as it had in recent years, Steinhafel said. “We have the capital to be able to do that and we have the appetite to do that, but the availability’s not there.”