While other chains (such as the one I work at) are slow to update their stores, Target continues to innovate and is testing a new look at 25 stores in the L.A. area. There are some photos below that are pretty impressive, especially considering the “before” photos look better than many other retailers look today already.
While they’ve had some issues (credit card info getting hacked set them back) they continue to innovate and I still enjoy shopping there. Their merchandising is always well done.
Target (TGT) has tapped its largest market, California, to test several potential changes to the look of its future stores.
In a pilot program called “LA25,” the discounter has taken its 35 top store enhancements that it has been testing across the country and put them all together in 25 stores in Los Angeles. Some of the enhancements include sleeker apparel fixtures, a better-lit fresh produce section that emphasizes organics, dedicated service stations for people to quickly pick up online orders, as well as the addition of specialists in key departments to help provide product knowledge.
There are “service advisers,” too, that assist in navigating the chain’s website and mobile app Cartwheel.
Also, Target continued with the overhaul of its restaurant options to make them more interesting for shoppers. For instance, it expanded the floor space devoted to Starbucks (SBUX) and added the coffee king to the five or so stores that didn’t have the concept before. It is also testing “healthy” fast-casual concepts such as salad bowl seller Freshii and sandwich maker Which Wich, which comes on the heels of the company announcing the launch of a Chobani yogurt cafe inside a new store set to open in New York City in October.
The new grocery section uses LED lighting to better highlight fresh produce and organic offerings.
“What we are doing with LA25 will influence our next-generation store experience that we are working on — there may also be specific sections from these stores that may help influence the chain quicker,” said Mark Schindele, a senior vice president at Target who’s leading LA25, in an interview with TheStreet. Target plans to spend $1 billion this year to spruce up the shopping experience of its stores, with a portion of that being devoted to remodels.
The company will undertake 39 full store remodels in 2016, and open 15 more stores.
The only thing not in the test stores? The inventory-checking robot that made headlines recently for wandering up and down aisles at a Target store in San Francisco.
California is Target’s largest market with more than 260 stores. A Target spokeswoman explained to TheStreet in March the 25 stores were chosen due to their density as well as their mix, with several stores being in Target’s smaller format model.
LA25 follows several upgrades Target made to its stores last year to drive sales.
Bye-bye boring customer service section, hello a place to grab a snack and an online order.
The company added people in the beauty department to provide information on products. It outfitted the apparel department with mannequins. And in perhaps the biggest move, Target inked a deal to open CVS (CVS) pharmacies inside of its stores. These are currently opening across the country.
Target’s efforts appear to be paying off in the form of stronger sales compared to others in retail.
Same-store sales rose 1.2% in the first quarter, falling short of the expectations of execs due to sluggish U.S. consumer spending, but much better than the declines by Macy’s (M) , Kohl’s (KSS) and J.C. Penney’s(JCP) . Target’s store traffic has increased for six straight quarters, running counter to the broader trend in retail.
Despite the benefits from store enhancements, Target took a cautious stance on its outlook for the second-quarter following a post-Easter spending slowdown.
Second-quarter sales may drop as much as 2% from the prior year. Earnings should be $1 to $1.20 a share, compared with Wall Street estimates of $1.19.
Apparel displays have been modernized, and resemble ones found at department stores.
“The stock’s historically high relative discount to the S&P 500 now appears justified, and we fear management is struggling to simultaneously define its vision and manage shareholder expectations,” said Jim Cramer and Jack Mohr of Action Alerts PLUS in a note after the earnings release.