Why Target is aiming at urbanites for growth

In the battle for city dwellers, big-box retailer Target Corp. plans to open three mini-stores in Center City over the next 22 months. The idea: Bring a slimmed-down Target to the neighborhoods rather than have residents venture out to the suburbs.

The company is betting that a vast number of millennials - 18- to 34-year-olds who are driving much of consumer demand these days, along with longtime residents and those returning to the city - will populate its "flexible format" stores, miniversions of a typical Target.

"We do research on who the guest is, and who is living in that neighborhood, and develop the assortment mix accordingly," Target spokeswoman Kristy Welker said. "It's a younger demographic, millennial age, who are into tech and are why we are offering tech accessories, fashion, and home items."

The urban push began for Target in 2012 and has gradually expanded to 18 flexible format stores, in such cities as Los Angeles, San Francisco, Chicago, Boston, and San Diego. Philadelphia is the latest.

On Friday, the company confirmed its plans to open a third store here - this time in the Art Museum area - that fits the flexible format design.

This means, Welker said, that Center City residents will no longer have to drive to the Northeast, City Avenue, or Columbus Boulevard to shop under the company's signature bull's eye.

The new Art Museum store at 2001 Pennsylvania Ave. is scheduled to open in October 2017. It is about one-fourth the size of a typical Target store, which measures 160,000 square feet.

The store follows the planned openings this summer of two even smaller Target stores, at 11th and Chestnut Streets and 19th Street and Chestnut.

The new stores will include a pharmacy, Target Mobile with cellphones and tech accessories, and pickup for online orders.

The Art Museum Target will take over the space now occupied by a Whole Foods, across from the back of the Barnes Foundation.

Twenty-year resident Melissa Rossow, 55, is not a fan of chain stores, but said they had succeeded in the area.

"Target with a pharmacy doesn't interest me because we already have two CVS's, and they're building a third one," said Rossow, a special-education teacher for the Philadelphia School District. "We also have two Rite Aids. Considering I have a few prescriptions to fill, I can crawl to any of these places."

But, she added, "it has been proven that any business will thrive here, because it's an established business area. It's a neighborhood where people have a lot of disposable income, and it's become a tourist destination. The restaurants and bars are always busy."

Larry Steinberg, senior vice president at CBRE Inc., predicted that "Target will be able to reach into the neighborhoods of Center City with these convenient, smaller store sizes.

"This strategy is also cost-effective," said Steinberg, who negotiated the deal to bring Target to 1112 Chestnut as part of the Brickstone project. "It gives Target access to the dense populations of Center City without the need to provide huge parking fields - with lots of expensive land - that is required by their large-format stores."

In courting urbanites, Target isn't alone. Wal-Mart and Lowe's are also going after them.

"Big-box retailers, like Lowe's and Target, are intent on dominating retail in urban areas in the same way that they have done so in the suburbs," said James Cook, Americas director of research and retail at consultant Jones Lang LaSalle. "Many retailers have picked clean the low-hanging fruit of suburban expansion.

"In urban areas, each new store has to be customized and organized to fit whatever parcel or property they are going into," Cook said. "But this is also some of the most exciting shopping that these retailers are offering, because when they do spend the time and money to customize their standard store to fit a certain city, they end up offering a unique shopping experience."

They also "have to appeal to shoppers of all ages to be successful," Cook added.

Welker agreed that the move to expand into urban areas is not intended to solely court millennials.

In Philadelphia, for example, 42 percent of the city's population is 40 or older.

"Densely populated areas allow us to serve guests that have typically traveled out of their way to get to a Target store," Welker said. "Now, we are going out of our way to bring a Target store to their neighborhood."

Those who shop on Target.com have yet another option.

"If they don't want a package sitting in their apartment building or front door, they can go to their nearest neighborhood store and pick it up," Welker said.

sparmley@phillynews.com

215-854-4184@SuzParmley