As being able to fulfill orders anywhere, anyhow has steadily become the expectation for brands, one of the United States’ largest retailers is overhauling its store design to meet it.
Target (NYSE: TGT) on Tuesday unveiled a new, larger model that will emphasize omnichannel fulfillment services, including same-day pickup, digital fulfillment and options like curbside and drive-up. The first new store debuted this week in the Houston suburb of Katy, Texas.
The new layout from Target is about 150,000 square feet, adding about 20,000 square feet to the chain’s average store size. That includes a backroom that’s five times larger than previous stores of a similar size, which is crucial considering that the company fulfills 95% of digital orders from its store locations.
The retailer’s new-look design will also allow it to offer a wider range of merchandise, including an expanded selection of food and beverage items. That will help it support same-day fulfillment services, which now account for more than 10% of its overall sales. In fact, those offerings were Target’s core growth driver in 2021, according to a company earnings report.
While Target will continue to open stores of all sizes, its efforts will now focus on the larger model. Half of its approximately 200 full-store remodels and 30 new locations, to which the retailer alluded back in March, will have elements of the new design beginning next year. And starting in 2024, all Target remodels and new stores will feature most of the new elements.
“Target’s stores are at the heart of how we deliver for our guests, whether they browse the aisles, shop online or stop 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 reimagined store design and larger store footprint that better supports our same-day services, we can give guests more of what they love.”
Watch: The talk about Target
In addition to more backroom space and a greater assortment of products, Target’s new stores will have larger windows and contain design features based on local culture and regionally sourced materials. The Katy location, for example, includes wood that can be found locally as well as a succulent garden in the shape of Texas.
But sustainability also factored into the overhaul. New stores and remodels will implement natural refrigerants to lower carbon dioxide emissions as well as electric vehicle charging ports for guests with zero emissions vehicles. Many locations will include rooftop solar panels.
Target hinted at some of these changes in March, when the retailer announced it would be investing up to $5 billion to scale its logistics operations. In addition to adding distribution and sortation centers, it said it would be increasing hold space at its stores to support same-day online fulfillment, order pickup and returns capabilities.
“We knew using stores as hubs would give guests more choice and convenience, while giving our operation more flexibility and capacity for future growth,” Mulligan said in March. “That was true prior to 2020 and could not have been more essential since that time.”
Equipping retail locations with fulfillment capabilities is nothing new, with plenty of brands looking to add automation and additional space to their store backrooms. But Target doing so is a huge deal given how much 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.