Target (TGT) CEO Brian Cornell said Wednesday that he's "increasingly confident" the company will open "hundreds" of small-format stores, reshaping the big-box chain's image and real estate footprint.
"We think we have the opportunity to enter many, many new neighborhoods," Cornell said on a conference call.
Target is currently operating nearly 30 small-format locations, including a new 45,000-square-foot store in Manhattan's hip Tribeca neighborhood, where the retailer hopes to glean lessons it can apply to future stores.
The model could prove crucial to Target's growth. The company on Wednesday projected fourth-quarter sales at stores open at least a year to be anywhere from down 1% to up 1%. The company operates about 1,800 stores.
Dense, urban areas and college towns are Target's focus for small-format locations. Fourteen of the 15 stores Target is opening this year are small-format locations, with recent openings including Philadelphia and Cupertino, Calif.
Cornell said the company is building "back-end capabilities" to accelerate its entry into the small-format space. That includes improved supply chains and product selection.
Target tailors each small-format store's product lineup to the local area, ranging from apparel, home goods, baby products, convenient foods and other essentials.
"We're still learning," Cornell said. "We're very pleased with the feedback."
Earlier this year, big-box chain rival Walmart announced plans to close its 102 smallest U.S. stores, dubbed Walmart Express, and sell 41 locations to Dollar General after the experiment sputtered. But the company is still opening small-format locations, totaling 70 locations in the current fiscal year and 20 in 2018.