Target (NYSE: TGT) Keeps the Small-Format Ball Rolling with Planned Times Square Store

It's a pretty good time to be Target (NYSE: TGT) right now. With a very good chance at being declared “king of the internet” based on our earlier projections—we considered it “late to the show” but representing part of a competitive landscape that's rapidly increasing in tempo and threat to Amazon—and turning out some excellent earnings, things are looking up for the retailer. So up, in fact, that word from CNBC has emerged that Target is planning to open a small-format store in Times Square sometime in 2022.

Target's Small-Format Stores Prove a Bullseye

This would not be the first time Target has opened such a store, which will boast a comparatively small footprint of just 33,000 square feet. Reports suggest that the average Target location measures about 135,000 square feet, and the old small-format “CityTarget” stores weighed in around 80,000 square feet. The new small-format stores, however, can be as small as 15,000, and the current average is about 40,000 square feet, making the planned Times Square store one of the larger small-format stores.

The new Target location will be found on 42^nd Street, between 7^th and 8^th Avenue, and will represent the 10^th such shop in the area. The city has proven to be fertile ground for small-format Target expansions, with locations springing up on the Lower East, Upper East, and Upper West sides.

In fact, some suggest that the smaller stores, so precisely targeted to address areas of cities or college campuses, have been a major key to Target's recent earnings success.  Such small-format Target locations have opened up all over, with August marking the opening of the 100^th small-format Target location and plan to bring in another 30 every year well on track.

Taking Advantage of a Changing Landscape

There's no doubt that the retail market has been downright disastrous for some companies lately. Sears is still closing stores, a development that left some shocked to hear that Sears (OTCMKTS: SHLDQ) actually still had stores to close in the first place. Ditto K-Mart, and the shock there was coming in two years ago in some cases. Meanwhile, a host of other retailers ranging from Bed, Bath & Beyond (NASDAQ: BBBY) to Family Dollar (NYSE: FDO) have all been cutting back on store openings, all with a common theme: customers are shopping more online.

We found that point out not too long ago, with the revelation that Black Friday was actually capable of harming some retailers, especially those who weren't keeping up with the increased flow of customers online. Target, meanwhile, has been keeping up with online traffic, while also taking advantage of the sheer number of its available locations to serve as ship-to-store options.

Ship-to-store does a great job of giving customers more options; instead of a multi-day wait to receive products shipped from online-only vendors, ship-to-store bridges the gap and allows customers to pick up their own items, sometimes with little more than an hour's wait. Some have suggested that this may have been the biggest reason Amazon (NASDAQ: AMZN) purchased Whole Foods (NASDAQ: WFM), to provide a network of physical storefronts to serve as shipping branches. The fact that ship-to-store often reduces shipping costs for retailers certainly doesn't hurt matters either.

Tripping Over its Own Feet?

Granted, it would be easy to say here that Target really doesn't need a 10^th store in the same city, but its plan to open frontage in a major tourist section of New York could be a smart plan. After all, with all that foot traffic, it's a safe bet that someone's going to need something that Target might stock. There are, at last report, 591 hotels and similar accommodations within a mile of Times Square itself, which means literally thousands of people potentially available to pick up toothpaste, inexpensive clothing, or any of the dozens of incidental products that Target might have on hand.