Target's future as national chain rides on Chicago success - Target's 11 new Greatland superstores in the Chicago, Illinois area - includes related article

Discount Store News, April 5, 1993

For Target, much rides on the success of the 11 new Chicago Greatlands opened March 14, since its entry into the nation's third largest metro market marks a major step eastward.

Whatever happens in Chicago appears certain to become a key factor in determining whether Target, indeed, is to become a national chain by the end of the decade. Aside from units in Florida and Atlanta, Ga., the East Coast remains a blank page for Target, while Wal-Mart is challenging Kmart and regional chains in the Northeast by saturating the region with new stores.

Moreover, Target has placed most of its chips on the Greatland concept, even though the superstore is far from proven. All of the 40 stores planned for Chicago will be the Greatland prototype, and in 1994 onward, about half of the 40 to 50 stores a year Target opens will be Greatlands. In addition, Target has incorporated many of the Greatland features, such as wide aisles and neon stripes to mark departments, into its conventional stores.

The Chicago openings push the Greatland count to 26 out of a total store count of 517.

In a parallel expansion thrust, Target is rolling out a conventional prototype designed for small markets, a 87,000-sq.-ft unit that carries the same merchandise mix as conventional stores but with fewer facings.

Target foresees a potential for 300 of the small-market stores, said N. Richard Nelson Jr., a retail analyst for Duff & Phelps, Chicago. It already has opened 12, including units in New Mexico, Nebraska and Minnesota.

In two swift steps, Target slashed the size of its Greatland prototype so that it now approaches the size of the largest conventional Target.

The first Greatland, opened in Apple Valley, Minn., in 1990, covered 169,000 sq. ft. The next prototype, such as the one Target opened in Columbus in October 1991, measured 140,000 sq. ft.

Now, the standard prototype opened in Chicago encompasses 125,000 sq. ft. In addition, Target designed a 115,000-sq.-ft. Greatland prototype for smaller markets, and may open the first one in 1993.

At the 1992 annual meeting of Target parent Dayton Hudson, chairman Kenneth Macke acknowledged that stores can get so large that they intimidate shoppers.

In general, a Target Greatland carries the same merchandise as a conventional Target, although it has beefed up its food offerings, including Greatland private label sodas, drinks and snacks.

Although the Greatland superstore is large enough to include a supermarket, Target has said it won't get back into fresh food, as its stores did in the early '70s with leased supermarket departments. But with Kmart and Wal-Mart both rushing into fresh food with their supercenters, Target may have no choice in years to come.

A Leo J. Shapiro & Associates consumer survey in Columbus, Ohio, a new market that Target entered in October 1991, shows that the three Greatland units hurt conventional Kmarts more than they do Meijer and Big Bear Plus, which both offer supermarkets and general merchandise under one roof.

In approaching the Chicago market, Target conducted a demographic study of Chicagoland consumers that laid the groundwork for micro-marketing.

Target knew, for instance, that the Elgin, Ill., Greatland shopper base includes a 17% Hispanic element, so it stocked the Greatland there with a Hispanic music selection, called Musica en Espanol. And the Elgin manager hired a few Spanish-speaking associates to communicate better with customers.

The market area for the Schaumburg, Ill., Greatland includes a sizeable contingent of Indonesian and Hispanic women, so it carries cosmetics blended for olive-skinned women.

In addition, its manager knows that family income of her shopper base averages a high $60,000.

Stores that include a large African-American population in their market areas are stocking African-American framed art and music.

Naperville, Ill., site of another Greatland, is one of the fastest growing suburbs in the Chicago area, with a relatively young population, high household income and a lot of kids. Accordingly, the store is beefing up selections of infants' and toddlers' apparel.

In another example of micro-marketing, the Target Greatlands carry the sweats and T-shirts wit the logos and colors of local high school teams, as well as licensed apparel for the Chicago pro teams, Bulls, Bears and White Sox.

More extensive micro-marketing awaits customer demands and purchases, Greatland stores managers say, but Target has laid the groundwork.

Along with other discounters, Target has been fixed on the needs of the mass market, but now is paying more attention to cultural and climatic needs in different markets, said Nelson of Duff & Phelps.

Target is spending a fair amount of time on micro-marketing, Nelson said. "It presents a very good opportunity."

Vendors are helping Target to match assortments with differing markets, Nelson said, and Target has the EDI and computer programs in place to make it possible.

Target has been pruning its merchandise lines of slower turning merchandise that provides less of a return on investment, Nelson said. "Target's product offerings now are narrower and deeper."