Target CEO unveils next-generation store concept

LAS VEGAS – While its robot-filled store of the future recently landed on the cutting-room floor, Target CEO Brian Cornell on Monday unveiled a less-revolutionary next-generation store that the company will open in a suburb outside of Houston this fall.

The new store prototype includes two separate entrances, similar to what it currently has at its SuperTarget stores. One will be aimed at inspiring customers with merchandise displays showcasing apparel and home goods. The other will be about convenience, with online order pickup close by and food and beverages near the doors for quick in-and-out trips.

"Expect lots of flexibility, open sight lines and discovery moments throughout the store," Cornell told hundreds of e-commerce leaders at Shoptalk, a digital commerce conference. "We're going to take what we learn in Houston to help guide us as we customize and remodel hundreds and hundreds of stores over the next three years."

The Texas store will include an outdoor space where customers can sit with friends, store fixtures that are rounded instead of having sharp angles, and some products such as beauty, jewelry and accessories displayed together instead of separately.

Groceries, as well as beer and wine, will be moved to the front of the store. There will be dedicated parking spaces outside where employees can bring online orders straight to customers' cars.

The store will also have a different look with stenciled concrete floors, unique lighting treatments, and wood-paneled walls and beams. About 40 Target stores being remodeled this fall, including the Nicollet Mall store next to the company's headquarters, will also get some of these elements from the next-generation prototype.

While the focus of the conference was on digital retail, Cornell used the keynote speech to argue that stores will be a big part of the landscape for years to come.

"The future of retail is digital," he said. "And people will also be shopping in stores for a long, long time."

Right now, about 30 million customers visit Target's 1,800 stores every week. Five years from now, it's unclear how many people will continue to shop in stores. It could be 80 percent of that, or even 70 percent, he said.

"Whatever it's going to go be, it's still going to be a really big number," he said. "So that means we need to keep investing in our stores to give guests every possible reason to shop."

Cornell told investors last month that the company will remodel hundreds of stores in the next few years and would have 600, or a third of its stores, "re-imagined" by 2019.

He also laid out a strategy that included lowering prices and launching more than a dozen exclusive brands in the next couple years as a way to help overcome this past year's sales slump and lower store traffic.

In addition, Target said it would ramp up its new store openings to 30 this year and 40 a year by 2019 when it will have more than 100 smaller-format stores, mostly in city centers and near college campuses.

On Monday, Target announced it would open a 43,000-square-foot store in midtown New York in a bustling retail district and just down the street from Macy's flagship store in Herald Square.

Earlier this year, Target scrapped a store of the future planned for Silicon Valley just weeks before it was slated to open. It was to include robots and a community gathering space, and would be a showroom where customers could pick up items on their way out. The initiative was one of a number of innovation projects Target killed as it has looked to reverse the sales decline and focus on more immediate growth.

"We made a tough choice," Cornell said when asked about the store-of-the-future initiative. "But our focus on innovation has to be something we can realize over the next three or four years inside the core business."

In the more immediate future, he said Target will continue to marry its digital capabilities with its physical stores. Already, stores fulfill nearly 55 percent of Target's online orders either through in-store pickup or shipping from the store.

In 2014, Target first began piloting same-day delivery in three markets. On Monday, Cornell said the retailer will be further testing same-day and scheduled deliveries. The company did not immediately provide further details.

"Think of a Target store of the future being a hyperlocal, shoppable distribution center," he said.

Kavita Kumar • 612-673-4113