Building on years of sales growth and record financial performance in 2020, Target plans to invest approximately $4 billion annually over the next several years to accelerate new store openings and remodel locations, improve fulfillment services and strengthen its supply chain.
After opening 30 stores in 2020, including adding a record 29 new small-format stores in a single year, Target said it plans to accelerate its growth. It will open 30 to 40 new stores each year to meet community needs in inner cities, college campuses, and dense suburbs.
In urban centers such as New York, Los Angeles, and Portland, Target reported opening more small-format stores to reach new customers. In dense suburban areas surrounding cities like Denver or Brooklyn, Target has identified locations for new mid-size stores to fill retail gaps.
“2020 was a record year thanks to the hard work of our team and their commitment to serving our guests amid unprecedented demand. As we move into 2021, we are building on the aspects of our differentiated model that make Target the one-stop store preferred by millions of customers,” said Michael Fiddelke, Target’s chief financial officer.
“Bold investments planned over the next several years will expand key in-store, fulfillment, and supply chain capabilities to drive deeper engagement with new and loyal customers, continued market share gains, and long-term profitable growth,” added Fiddelke.
Improved distribution services and in-store experience
Target said that after a strong reception last year to the addition of fresh, refrigerated, and frozen foods to Drive Up and Order Pick-up services nationwide, it will increase the total assortment of these food products for pick-up. After a successful initial trial in hundreds of stores, an additional 800 locations will offer the adult beverage pick-up service in the coming months.
Technology enhancements to Target’s app will offer a more personalized experience for Drive customers. This includes informing team members where to place the order in their vehicle or authorizing a different customer, such as a family member, to pick-up the order.
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The retailer reported that it ended 2020 with ten owned brands that generated $1 billion or more in annual sales each, and four of those exceeded $2 billion. The company will continue to incorporate in-store and online brand partnerships with the opening of approximately 100 Ulta Beauty at Target stores in 2021, with plans to add hundreds more in the future.
Leveraging its more than 15-year relationship with Apple, Target implemented a new Apple shopping destination online and in 17 stores, with expanded assortment, increased presence, and service enhancements. More stores will open this fall.
New Target store openings and remodels
On college campuses, including those at the University of Georgia and the University of Michigan, Target will open new small-format stores to introduce its shopping experience to college students.
Target expects to accelerate its store remodeling program this year and complete approximately 150 in time for the year-end holiday season, with plans to remodel more than 200 stores per year beginning in 2022. Future store design will focus on security and ease, with additional touchless features, upgrades that facilitate same-day fulfillment, and more room for social distancing.
Last-mile capabilities and replenishment
To increase the capacity of Target’s processing operations and expand its centralized store model, the company is testing a new type of facility in Minneapolis called a sortation center. It expects to open five more in 2021.
With this new last-mile capability, the sorting center picks online orders from local stores several times a day and sorts them into efficient transport routes.
This takes sortation activity out of warehouses to be more efficiently consolidated into one facility, giving store teams more time and space to fulfill additional orders while reducing outside carriers’ burden. This increases stores’ fulfillment capacity, facilitates last-mile fulfillment costs, and speeds delivery to customers.
The company said it is also investing in its supply chain replenishment capabilities to support continued store growth in the future. This year, Target expects to open two distribution centers, one in Delaware and one in Chicago. Two more are planned to open in 2022 to support the east and west coastal areas.