Target deals may never look the same

As the ability to fulfill orders from anywhere has become a growing expectation for brands, one of the largest retailers in the United States is overhauling its store design to accommodate this requirement.

Target (NYSE: TGT) on Tuesday unveiled a new, larger model that will highlight omnichannel fulfillment services, including same-day pickup, digital fulfillment, and options like curbside and drive-up. The first new store opened this week in Katy, Texas, a suburb of Houston.

Target’s new layout is approximately 150,000 square feet and increases the chain’s average store size by approximately 20,000 square feet. That includes a backroom that’s five times larger than previous stores of a similar size, which is crucial considering the company fulfills 95% of digital orders from its stores.

The retailer’s revamped design will also allow it to offer a wider range of goods, including an expanded food and beverage selection. That will help it support same-day fulfillment services, which now account for more than 10% of its total revenue. In fact, those offerings were Target’s top growth driver in 2021, according to an earnings report from the company.

While Target will continue to open stores of all sizes, its efforts are now focused on the larger model. Half of its approximately 200 complete remodels and 30 new locations, which the retailer alluded to back in March, will feature elements of the new design from next year. And by 2024, all of Target’s remodels and new stores will feature most of the new elements.

“Target’s stores are at the heart of how we serve our guests, whether they’re browsing the aisles, shopping online, or stopping by for same-day services like Order Pickup and Drive Up,” said John Mulligan, executive vice president and chief Operating Officer of Target. “With our redesigned store design and a larger store area that better supports our same-day services, we can offer our guests more of what they love.”

Watch: The Talk About Target

In addition to more backroom space and a larger product range, Target’s new stores will have larger windows and incorporate design features based on local culture and materials. For example, the Katy location includes wood found on site as well as a succulent garden in the shape of Texas.

But sustainability was also taken into account during the overhaul. New stores and conversions will use natural refrigerants to reduce carbon emissions, as well as electric vehicle charging stations for guests with zero-emission vehicles. At many locations, solar panels are installed on the roof.

Target hinted at some of those changes in March, when the retailer announced it would invest up to $5 billion to scale its logistics operations. In addition to adding distribution and sorting centers, it announced plans to increase storage space at its stores to support same-day online fulfillment, order pickup, and return capabilities.

“We knew that using stores as hubs would offer guests more choice and convenience while giving our operations more flexibility and capacity for future growth,” Mulligan said in March. “That was before 2020 and couldn’t have been more important since.”

Adding fulfillment capabilities to retail locations is nothing new, as many brands are looking to automate their storefronts and add extra space. But for Target, this is a big deal given how heavily its business depends on fulfilling orders from nearby stores, which the company boasts are within 10 miles of three-quarters of the U.S. population.

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