CityTarget: Major disappointment or epic failure?

Looking no different than other Target formats, the urban initiative missed an opportunity to reinvent the retail experience.

By TheStreet Staff Dec 3, 2012 1:50PM

thestreet logoTarget store in San Bruno, California, Justin Sullivan, Getty Images

By Rocco Pendola

 

I'm not much of a bricks-and-mortar shopper. Unless there's something unique or otherwise stimulating about the physical retail experience, I stay away. By and large, it's a soulless proposition.

 

On a regular basis, however, I visit the retail stores of brands like Apple (AAPL), Tesla Motors (TSLA), Lululemon (LULU) and Restoration Hardware (RH).

Why?

 

Because these stores have something to show me. I have never bought anything from three of them, but I still visit regularly. And I'm hardly alone. There's something powerful about that when you consider the challenges retailers face.

 

We're morphing into a world where you do not need to go to physical stores for much. Amazon.com (AMZN) and other e-commerce successes already have the things that don't spoil. But it won't be long before Amazon Fresh expands out of its Seattle-area pilot phase and then the company will have the nation's groceries taken care of as well.

 

In the meantime, there's something to be said for keeping bricks-and-mortar retail alive. It would be a shame to see it die. With a little vision and real risk taking, it can come alive again. But retail absolutely must step up its game.

 

This past weekend, I was excited to visit Target's (TGT) new urban concept: CityTarget.


The idea of a Target that appeals to city dwellers has always intrigued me. It has the potential to be something special -- to leverage the unique sense of place retailers like Whole Foods Market (WFM) create in dense city centers.

 

I have only visited the Westwood location (in West Los Angeles adjacent to the UCLA campus), but it seems that Target has failed to breathe any new life whatsoever into bricks-and-mortar retail.

 

I always wondered why company executives don't say much about CityTarget on conference calls. And the analysts don't ask too many questions. While "urban" is not a major revenue generator today, it represents a massive opportunity that Target should focus on.

 

Here's pretty much all Target had to say about CityTarget on its most recent conference call:


... After 2 additional third-quarter openings, we now have five CityTarget stores operating in four different metropolitan areas: Chicago, Los Angeles, San Francisco and Seattle. As expected, initial traffic to these stores have been strong, while gross margin mix has been slightly better than expected. The CityTarget team has done an outstanding job, accomplishing a virtually flawless launch of this new format. We plan to open three more CityTarget locations in 2013.

Woo-hoo!

 

Initial research indicates that the typical guest in this new urban format is younger and more affluent than we see on average across the chain. And as expected, these stores are attracting many new guests.

And, like, duh!

 

If city governments and urban planning departments rolled over, found some space, loosened ever-tightening parking restrictions and permitted Target to place suburban-sized stores in urban areas, that's exactly what Target would have done.

 

That's just another example of why bricks and mortar is such a depressing space. The CityTarget in Westwood is hardly different in the way it "feels" and, for the most part, "looks" from any run-of-the-mill suburban and/or mall Target. Knowing the physical characteristics of its downtown San Francisco and Los Angeles locations, I do not expect anything meaningfully different there.

 

Of course, the Target in a place such as Westwood draws a younger, more affluent demographic. I can guarantee that, by statistically significant margins, it also draws more people who get to the store by walking, biking or public transportation than the standard suburban shops. I bet the education level and median income of the Westwood CityTarget shopper far exceeds that of the typical shopper at the Niagara Falls, N.Y. Target near where my parents live.

 

That's the type of thing Target has to tell us about on their conference call? The painfully obvious. The type of stuff you learn when you take your first college course in research methods or data analysis.

 

That's because CityTarget isn't a "concept" or, as the company called it on the call, a new "format." The fact that Target executives would refer to CityTarget as something novel illustrates a mix of disingenuousness and proof of how bad things have become in bricks-and-mortar retail.

 

Where Target had the opportunity to innovate, it decided to make barely noticeable tweaks to the plans for its store so it could tap the urban market. While that might work, it shows little foresight on Target's part, zero respect for the state of retail and no desire whatsoever to disrupt, transform or progress in any worthy way.

 

Target does nothing more than degrade the urban environment with CityTarget. They're bringing suburban accoutrements to the city. Kill me now.

 

Plop your above-average American down in the middle of the CityTarget I visited without a view of the entrances and exits and they would not be able to tell you if they were in Target Westwood/UCLA or Target Parma, Ohio.

 

There's no distinction. Want to know the difference? Fewer toys. Fewer kids clothes. Why? Because young children tend not to populate the UCLA campus area and downtown LA, San Francisco, Seattle and Chicago.


In fact, the numbers bear out what I'm saying here. In its latest quarterly report, Target breaks down how many square feet of real estate it uses by store type: Target general merchandise stores (395 stores, as of end of Q3); expanded food assortment stores (1,130); SuperTarget stores (251); and CityTarget stores (5). On average, SuperTargets take up the most square footage at 177,291 apiece. Expanded food stores come in at 129,281 per. General merchandise stores run 119,084 square feet each. And CityTargets are not too far behind thus far at 102,800 square feet per location. Once inside you really cannot tell the difference between the stores, with SuperTarget the obvious exception.

 

Near-term, CityTarget should help the company drive traffic and sales. There might be a little cannibalization -- the San Francisco resident who usually drives out to suburban Daly City will now take the shorter trip downtown. But that likely will not be much of a drag.

 

From a long-term standpoint, Target provides another painful example of what little vision it and its peers possess. Maybe the company is not concerned with such big picture stuff, but it should be.

 

More from TheStreet.com

4Comments
Dec 3, 2012 5:05PM
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"Target does nothing more than degrade the urban environment with CityTarget. They're bringing suburban accoutrements to the city. Kill me now."

What kind of pretentious hipster princeling is writing this garbage?  

"On a regular basis, however, I visit the retail stores of brands like Apple, Tesla Motors, Lululemon, and Restoration Hardware.  Why?


"Because these stores have something to show me. I have never bought anything from three of them, but I still visit regularly. And I'm hardly alone. There's something powerful about that when you consider the challenges retailers face."


Oh, THAT kind of pompous, self-important child - the kind full of opinions about how other people should be shopping, even though he himself is only interested in going into shops for his amusement and apparently doesn't have to do the same kind of mental arithmetic that the rest of us have to accomplish when making purchasing choices.


Sorry, Rocco, those of us who have to punch a clock instead of selling circular drivel to websites don't always choose our shopping locales based on what we find the most ENTERTAINING.


Heck, I live and work in New York City, my wife and I are both in creative industries, are Apple users/shoppers, and we make well above the national median household income.  By Rocco's estimation, I'm guessing he thinks we should be just like him and be looking for a shopping experience to boost our sense of urbane self-satisfaction.


I just don't see the f#@*ing problem here.  Are CityTargets making money?  Shouldn't that be the point?  The beginning and end of this article is that Rocco Pendola is too cool for CityTargets, and the rest of us city-dwellers should be woefully disappointed that Target has established locations in our urban environments where we can't have our egos stroked while picking up a tube of toothpaste, a six-pack of beer, and some spare socks in one quick trip - the kind of thing that Amazon will NEVER be able to accomplish.


The Street, would you please not accept any more crap that this guy writes?

Dec 3, 2012 3:02PM
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What should they have done differently?
Dec 3, 2012 3:49PM
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What Target has going for it is their stores are clean and bright. Have you been to a Sears or Kmart recently? Dim, dreary, dirty.
Dec 3, 2012 5:55PM
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I BELIEVE....The author could have been a little less pretentious about his comments....

 

The reason being, is several of us reading this dribble; Might shop at all those places and be able to buy their products....Any of them..

 

I could say, "I can buy and sell the Author", but again that would be "pretentious and rude"

Manners my man, Rocco...MANNERS.  

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