Target’s bet to expand online sales: Make brick-and-mortar stores bigger

Last week Target announced what seems like maybe a counterintuitive strategy to help grow its online sales: bigger stores.

More than 95% of the products ordered online from Target are shipped or picked up from neighborhood stores. Fulfilling orders that way – rather than from a big warehouse – can be more efficient, said Bryan Eshelman, a retail consultant at AlixPartners. 

“Consumers like the fact that a shipment from a store or a ‘buy online, pick up in store’ is much faster,” he said.

And retailers like that they can use an existing store to serve both online and in-person shoppers.

But most locations weren’t built to accommodate online pickup, said retail analyst Sucharita Kodali at Forrester.

“They basically just converted a bunch of parking spots in the front of the store to the buy online pickup spots,” Kodali said.

That ad-hoc arrangement can be a problem when orders include anything from toilet paper to ice cream to refrigerators.

And there’s a little bit of inefficiency.

Now, Target is designing new stores with bigger stock rooms and a dedicated area for pick-up orders.