It's not just Wal-Mart (NYSE:WMT) that understands the consumer's changing preference for convenience by opening small format stores to meet their grab-and-go needs. Target (NYSE:TGT) is opening its first TargetExpress store in Minneapolis this weekend that at 20,000 square feet will be just 15% of the size of the typical store customers are familiar with.
Like its retail rival, Target will be using the mini-store format to experiment with and gain insights into shopper habits, but will also build on its previous tests with the smaller sized CityTarget, a urban-oriented shopping experience that was about two-thirds the size of the typical Target store. So the latest size reduction marks a big leap downwards, though like its larger brethren, will still carry a large assortment of goods.
Convenience stores have become the go-to one-stop shop for consumers on the move. With a wide array of groceries; fresh, prepared foods; and even gas -- check out a Wawa, Sheetz, or Speedway chain -- the c-store format is in a growth phase at the moment, with multibillion deals being struck to expand their proliferation. Two months ago Marathon Petroleum paid $2.8 billion to buy the retail operations of Hess, which followed Energy Transfer Partners paying roughly $1.8 billion for 630 Stripes c-stores from Susser Holdings that it will add to its 4,900 or so Sunoco retail outlets it picked up two years ago.
Consumers have chosen the c-store as among their preferred shopping destinations because, for one, they're convenient, usually located near to home or on the way to work, allowing shoppers an easy means of stopping in, picking up, and going. But c-stores are also expanding the quality of their offerings such that the market researchers at Technomic say 34% of consumers say they would have visited a restaurant had they not purchased a prepared food from a c-store on their most recent visit.
Which is why the growth of the small format store is seen as critical to Wal-Mart's future. While it still plans on opening a number of its supercenters this year, the real focus of its expansion plans in 2014 will be on its mini stores where it intends to open as many as 300 during the coming fiscal year. That's double the number originally planned and will add as much as 23 million square feet of space across all its formats.
The risk for Target, however, just as for Wal-Mart and other retailers experimenting with the smaller square footage store, is having enough product on hand and a diverse enough universe of brands to satisfy consumers accustomed to the array of goods available at their big box brethren.
Despite their growing numbers, you can't apply the same broad brush to the c-stores themselves. They're offering one thing only -- convenience -- and shoppers know they do it well. Wal-Mart and Target, on the other hand, are trying to offer the best of both retail worlds, straddling the fence between convenience and selection, and their efforts may satisfy neither. Consumers might be tired of the long lines, difficulty in navigating the bigger stores, and the time needed to shop there, but brand loyalty is still a powerful motivator and the necessity of triaging those they carry may turn off some shoppers to these slimmed down big boxes if their preferred brands are not stocked.
Target needs this experiment to successfully attract customers as it continues to grapple with its data breach debacle and a bumpy rollout of its stores in Canada. TargetExpress will allow the retailer to get closer to its customers, or get nearer to more of them, by enabling it to open more urban stores. That can only help put Target in the express checkout lane for recovery.