Target Is Missing a Big Opportunity to Open More Urban Stores

(MoneyWatch)  Discounter Target Corp. might soon open more stores in urban locales. In an interview with Bloomberg published Nov. 18., Chairman and CEO Gregg Steinhafel said: "We know that consumers in dense urban areas love Target. We have to work harder at trying to get a smaller Target in those areas."

So the question is: What's taking the retailer so long to capitalize on the plan? As Steinhafel says, urban areas have the population numbers Target wants. Many of those places also often boast considerable household incomes and are starved for the goods that major chains provide at reasonable prices.

Plus, national chains offer a good track record, especially in New York City. What's so puzzling is that Target's own store in Brooklyn's Atlantic Terminal is an example of a jam-packed location that most retailers would kill for. The chain also has a promising future in The Bronx.

Whole Foods, The Home Depot, Bed Bath & Beyond, and most recently, Costco, all operate high-profile Manhattan locations. Costco's opening of its Harlem store this month is especially attracting a lot of attention.

Said Joe Portera, a Costco executive vice president and chief operating officer: "This is a big deal for us. We've been trying to get in forever. It's very important that we do another one." And he said that without any knowledge of future sales returns at they newly opened Harlem location.

Granted, urban sites are tougher to locate and construct than suburban stores in open spaces. And real estate prices are a lot higher. But the potential income and foot traffic of a Target store would likely sway a landlord to give the chain a break on its lease, especially in this commercial real estate bust. During the recession, Target's sales aren't what they used to be, but surely a company with $436 million in third-quarter net earnings can afford to take a few gambles that may pay off.

It's not as if Target is Walmart, a big-box player that desperately wants to enter urban areas but constantly faces opposition from labor unions and community groups. Communities, such as Santa Barbara, Calif., openly court Target.

The chain should consider listening to those proposals -- and act fast -- or its competitors could quickly get better opportunities.

Store image by Flickr user j.reed.