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Target to open more smaller stores and test c-store sized concept; expand robotics

small format Target in Burlington, Vt.
Small-format Target location in Burlington, Vermont

Target Corp. on Tuesday detailed several new initiatives for 2020, including robust expansion of its smaller-sized format, the scaling of a robotics solution and the addition of alcoholic beverages and fresh groceries to its pickup services.

The retailer revealed its plans at an investors meeting following the release of its fourth-quarter earnings. Target’s net income earnings grew 4.4% to $834 million for the quarter.  

Following the opening of its 100th small-format store last year, Target is planning to open nearly 36 locations in 2020, making it the biggest year to date for small-format expansion. Target's smaller-sized stores contributed more than $1 billion in total sales in 2019.

Target also said it will begin exploring sites for stores that are approximately 6,000 sq. ft. – roughly half the size of its smallest small-format store – as it looks to reach even more shoppers in urban neighborhoods and on college campuses. Target expects to sign the first lease for the new smaller format in 2020, with an opening date in 2021.

Meanwhile, the chain’s remodel program remains on track to complete more than 1,000 store remodels nationwide by yearend, with about 300 locations to be updated this year.  (The average sales lift of a remodeled Target store has been in the range of 2% to 4% in year one, with an average of more than 2% in the second year.)

As part of its remodel program, Target plans to test a new front-of-store layout designed to create a more welcoming first impression, with fresh flower displays, a curated product assortment and lower walls and counters to make it easier for associates to help customers.

In addition, Target will also unveil a “transformed” electronics department in 200 stores this year, followed by 200 more stores in 2021. The new experience will create a more inviting destination, offering a compelling showcase for top brands and dedicated spaces for the retailer's trained tech consultants to assist shoppers, the company said.

In other initiatives: 
•    To increase the speed and efficiency of its supply chain, Target will begin scaling robotics solutions that have been in development and testing across the country to replenish inventory to hundreds of stores by the summer of 2020. The technology enables precise sorting on an aisle-by-aisle basis to help store associates fill shelves easier and faster while reducing backroom inventory. 

In 2020, Target also will open new warehouses near key markets, including New York and southern California, to more efficiently replenish stores in high-volume areas.

•    Target will offer an assortment of fresh grocery and adult beverage items via its order pickup and drive up fulfillment. Shoppers will be able to order popular grocery items such as milk, eggs, bananas and more, and have their items delivered directly to their car or ready to pick up at a Target store. Testing will begin in Minneapolis-area stores in the spring, with plans to expand the service to nearly half of Target's stores in time for the holiday season. 

Target also will test adult beverage fulfillment through Order Pickup and Drive Up in more than one hundred stores in Florida and Oregon this spring, with plans to expand the service to the majority of its stores by the holiday season.

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