Target, the trendy retail chain with a red bull's-eye logo, has its sights set on a new kind of customer: college students.
To reach them, the eighth-largest retailer in the U.S. by sales is shrinking its footprint with mini-stores that are about a third of the size of a typical 130,000-square-foot Target. Their pared-down and curated product selection packs a punch, however, with strong sales pushing the Minneapolis-based chain's expansion, said company spokesperson Jacqueline DeBuse.
In the last several years, Target has added around 100 such stores, of which about one-quarter are near college campuses. It plans to open about 30 small-format stores annually over the next few years around colleges as well as in cities and other areas lacking space for a full-size location.
Because Target stocks a wide variety of items and its supply chain allows the retailer to readily juggle products based on consumer interest, she said, its smaller stores are able to meet demand for items specific to its college customers, such as grab-and-go food, electronics and bedding that fits dorm room mattresses.
The retailer is not alone. While colleges have long looked to outside companies to help them run features like bookstores and fast-food restaurants on campus, a newer retail push includes department stores, supermarkets and even locations of popular apparel brands.
"Good retailers are always looking for an outlet," said Steve Niggeman, an executive vice president with Metro Commercial, which brokers real estate deals between colleges and retailers, including Target. While colleges vary in size and culture, their students, staff and even visiting parents can be "pretty captive" customers, he added.
Creating loyal shoppers
Late last year, the Florida-based grocery chain Publix opened its first on-campus location on land leased from the University of South Florida, even though it already had a store less than a mile and a half from the Tampa campus. The spot, about half the size of its typical supermarket, is located near the school's new residential village, which can house around 2,000 students.
It has been a success on several levels, said Ana Hernandez, assistant vice president of housing and residential education at the university. Students are looking for more amenities, she said, while the university is seeking ways to deepen students' connections to the campus community. Before the deal was made, she added, the university's student government passed a resolution in favor of adding the supermarket. And Publix agreed to hold at least two job fairs each year to offer students jobs and internships.
"There's no question retailers are trying to build loyalty," said Nick Egelanian, the president and founder of SiteWorks, a retail and development consultancy. While there's a big movement among colleges and universities to build more student housing, retailers know being associated with a dorm is a positive experience for the brand, he added.
Still, Niggeman warns that not every school can support this type of retail. Indeed, USF has 50,000 students, including around 6,300 who live on campus. He estimates colleges with at least 20,000 students could support additional retail on campus. But as more students choose where to go to college based on the type of "experience" they can have, retail options can become a factor, he said.
Given the popularity of athleisure wear, for example, he guessed chains such as Lululemon would be right at home on some campuses. In fact, Lululemon has opened "seasonal" temporary stores near several institutions, including one close to the University of Pennsylvania, in Philadelphia, last year.
Egelanian thinks of this growth as a new variation on an old theme. "There has always been retail [near] colleges," he said, adding that some, such as Harvard University, Georgetown University and the University of California, Los Angeles, exist amid well-established neighborhoods chock full of retail stores.
Citing Target's growth, Egelanian argued that the new stores are more an outgrowth of retail chains moving into urban areas. But he stated that the retailer's ability to adjust nimbly to meet demand gives it a leg up on other retailers, such as Walmart, in this kind of a market. For its part, Walmart pulled back on a similar initiative a few years ago.
One of colleges' stalwart retailers, Barnes & Noble, has noticed changing retail trends on campuses. The chain now refreshes its merchandise three to four times a year, said Kenneth Wincko, vice president of marketing for Barnes & Noble College. Inside its campus stores, the bookseller is experimenting with specialty retail, such as curated selections of health and beauty products, or journals, athletic wear and other wellness-related items.
Barnes & Noble tries to integrate into campus life in other ways as well, hosting up to 3,000 events per year and opening pop-up shops near sports stadiums during major events. It is also open to students' feedback. For example, at Barnes & Noble College's Rutgers University campus store, students asked to buy the plants — so the chain is now experimenting with selling plants, Wincko said.
The chain currently has about 770 on-campus locations, and Wincko said there are plans to add dozens more each year.
To stay in touch with student needs, Barnes & Noble each year surveys 100,000 students using email addresses collected from campus stores, he said. Recent survey results showed that half of students responding don't have all the materials they need on the first day of class. To address that, the company is working with faculty to identify needed items, from books to lab equipment, so the store can be properly stocked before the semester starts.
What's next for campus retail
Today's students may be comfortable shopping online (in some cases even during lectures), but Wincko and others say blending brick-and-mortar and e-commerce is key.
Target plays up its ability for students, or their parents, to buy items online and pick them up at a nearby store within an hour, DeBuse said. The retailer is seeing double-digit sales growth in this area, she added, which is especially popular at the beginning of the academic year.
Amazon's pickup points on or near college campuses serve a similar purpose.
Yet the bonus for retailers looking to do business on campus, according to DeBuse, is the ability to create positive feelings about their brand just as many students are beginning to make their own purchasing decisions.
Even Niggeman isn't sure where this trend will end up. "We're not going to be putting 1 million square feet" of retail on campus, he said. But colleges that are increasing enrollment should consider how retail factors into that growth. "As you expand enrollment, you need more support," he said.
Correction: A previous version of this article misidentified the location of Barnes & Noble College where students asked to buy plants. It was at Rutgers University. This story has also been updated to clarify the number of Target small-format stores located near college campuses.