DENVER — Target Corp. is aiming to upgrade the stores to build upon the momentum of last year, when the firm generated the strongest retail segment profit in its history.

This story first appeared in the June 10, 2010 issue of WWD. Subscribe Today.

Gregg Steinhafel, chairman, president and chief executive officer of the Minneapolis-based discounter, told the annual meeting of shareholders here Wednesday, “The changes beyond food are so extensive, they resemble a brand new store.” He said there will be renewed emphasis on “more open, visually compelling departments.”

Kathee Tesija, executive vice president of merchandising, told WWD following the meeting that, in beauty, there will be efforts to “upgrade the environment so customers feel like browsing,” rather than just popping in to buy a tube of lipstick and heading out the door.

“Beauty was organized and very neat, but not very inspiring,” Tesija said. To change that, endcaps were added to highlight new product, and gondolas were lit for ease of browsing. Additionally, 200 stores now feature computers in beauty that can help guests choose hair color and skin care items, a feature officials expect to roll out in an additional 250 units by yearend.

Those same 200 stores have also received a footwear makeover: Gondolas are now closer to eye level, and more mirrors and seating have been added with backdrops of seasonal product.

While children’s wear results have been disappointing, the use of a more friendly color palette in kids’ departments has started to turn things around, aided by merchandising that, through mix-and-match presentations, makes it easier for parents to match tops with bottoms.

Also on Wednesday, Target increased its quarterly dividend to 25 cents a share, 47 percent above the previous payout of 17 cents.

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