The island of Manhattan was covered in red and white at the end of June. Busses rolled by with streaked crimson banners, the dirty tile mosaic walls of the subway lines were coated in summer masks of playful stick figures inviting the city’s residents and tourists to Harlem. The New York Post ran full issue promotions with barkers on street corners from Washington Heights down to Wall Street. Everywhere you looked, there was a tiny red dot sitting inside a larger red circle. Target (NYSE: TGT) made sure everyone who in the city that never sleeps knew they had come to town.
The new Target at the East Harlem Mall may have put bonafide big box retail on the island, but the store itself is indistinguishable from your average target. Customers coming in from New York City’s outer boroughs would be hard pressed to tell the difference between your average suburban shopping center and Target’s new Harlem location. Residents of other cities, however, are going to have an entirely different experience in the future. Manhattan is just the start—Target is looking to change the face of urban retail by 2012.
While Wal-Mart‘s (NYSE: WMT) biggest competitor has traditionally kept itself to the suburbs and smaller cities, Target’s new initiative will see them opening stores in eleven of the United States’ biggest cities over the next two years. The first of which will open in Seattle, with others to follow in San Francisco and Baltimore. Unlike Target’s stores in Chicago and Manhattan, the new urban shopping centers will only take up around 80,000 square feet of real estate. While that will make the Seattle Target significantly bigger than almost all of its other metropolitan businesses, it will also only be just half the size of most Targets across the country.
Wal-Mart is also looking to buy up property in major cities, including Detroit, San Francisco, and Chicago, but their plans are a bit more familiar than Target’s, with aims to build both supercenters alongside smaller outlets. Target’s push for smaller retail chain will change their business in addition to their locales. With smaller stores that don’t stock typical Target items that don’t sell in dense urban areas—people who live downtown tend not to spend big bucks on lawn furniture—the retailer is looking to remake themselves as giant convenience and entertainment stores with smaller products always available.
Target is making many strides this year to stay abreast of a rapidly changing consumer population. In addition to new city-bound stores, Target announced their new plans to aggressively develop their electronics departments. Earlier this summer, they announced the new Target Mobile program, setting up mobile phone activation centers in their stores, as well as the new Target Trade-In program, inviting customers to trade in old electronics like iPods towards new purchases. So far, so good considering Target has had a successful 2010 while other businesses are hurting due to a low spending public. Target’s net earnings for the second quarter were $679 million. Provided these new stores are built on schedule, Target will have a whole new consumer base to help build those profits.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
12 Little-Known Stocks That Will Lead the Mobile Internet Revolution. All my research and proprietary stock picking tools are ringing loud and true right now — mobile Internet is one of the biggest money-making opportunities out there. And these stocks are about to take the Street by storm. Get their names here.
