CityTarget: Major Disappointment, but Is It An Epic Failure?

I always wondered why company executives don't say much about CityTarget on conference calls. And the analysts don't ask too many questions. While "urban" is not a major revenue generator today, it represents a massive opportunity that Target should hyper-focus on.

Here's pretty much all Target had to say about CityTarget on its most recent conference call:

... After 2 additional third quarter openings, we now have five CityTarget stores operating in four different metropolitan areas: Chicago, Los Angeles, San Francisco and Seattle. As expected, initial traffic to these stores have been strong, while gross margin mix has been slightly better than expected. The CityTarget team has done an outstanding job, accomplishing a virtually flawless launch of this new format. We plan to open three more CityTarget locations in 2013

Woo-hoo.

Initial research indicates that the typical guest in this new urban format is younger and more affluent than we see on average across the chain. And as expected, these stores are attracting many new guests

And, like, duh!

If city governments and urban planning departments rolled over, found some space, loosened ever-tightening parking restrictions and permitted Target to place suburban-sized stores in urban areas, that's exactly what Target would have done.

That's just another verbal specimen of why bricks and mortar is such a depressing space.

The CityTarget in Westwood is hardly different, at least in the way it "feels" and, for the most part, "looks" compared to any run-of-the-mill suburban and/or mall Target. Knowing the physical characteristics of its Downtown San Francisco and Los Angeles locations, I do not expect anything meaningfully different there.

Of course the Target in a place such as Westwood draws a younger, more affluent demographic. I can guarantee that, by statistically significant margins, it also draws more people who get to the store by walking, bicycle or public transportation than the standard suburban shops. I bet the education level and median income of the Westwood CityTarget shopper far exceeds that of the typical shopper at the Niagara Falls, New York Target near where my parents live.

That's the type of thing Target has to tell us about on their conference call? The painfully obvious. The type of stuff you learn when you take your first college course in research methods or data analysis.