Target's Urban and International Plans Are Great, But Late

Last Updated Jan 22, 2010 5:35 PM EST

Some of the highlights discussed at Target's (TGT) recent investor meeting were management's intentions to open smaller-format stores to break into urban areas and start expanding into countries other than the United States. This a strategy that serves the company well, but what took it so long to make these commitments?

Not that Target said anything too concrete. A new prototype to enter urban locales will get tested "within the next few years." Meanwhile, the retailer's expansion into Canada, Mexico or Latin America will take place "beyond a three-to-five year horizon." Not too specific.

As BNET Retail pointed out late last year, Target is already missing the boat to open urban locations compared to some of its big-box contemporaries. In Manhattan, for example, Costco Wholesale (COST), Bed Bath & Beyond (BBBY) and The Home Depot (HD) all hold a presence. Walmart (WMT), traditionally a suburban and rural player, is also making a push to open urban stores. The funny thing about Target's newly stated intention of going urban is that it already operates some, like its downtown Brooklyn, N.Y.; location, though at least one blogger is pretty unhappy with that particular store.

On the international front, Target is way behind some of its peers. Walmart has an enormous international presence, with more than 4,100 stores in 15 foreign countries. The Home Depot operates stores in Canada, China and Mexico. Australia, Canada, Japan, Korea, Mexico and Taiwan all have at least one Costco.

In Canada, at least, it sounds as if Target is wanted. Retail analyst John Winter told the Canadian Press that Target is missing out on a large and affluent market in the Toronto area and that in Canada "there is a gap between Wal-Mart, Sears and the [Hudson's] Bay. Target would fill that very nicely."

For its part, Target says it is waiting to move in on other countries because there is still a lot of opportunity for domestic growth. But the retailer might not want to wait too long on that, and its urban infill intentions, because those opportunities might not always exist.

Target store image by Flickr user j.reed.