Target “pop-up” stores go up in SF, NY, DC

Target Corp., the retailer expanding in U.S. cities, opened so-called pop-up stores in three urban centers to generate holiday-season sales and publicity.

The second-biggest U.S. discount chain is running Target To-Gos in New York, San Francisco and Washington today through Dec. 13. The temporary stores offer 50 products, including 99- cent Christmas tree ornaments, Sony Corp.’s PSP Go handheld video-game player for $249.99 and pieces from Target’s Rodarte fashion line that won’t be available nationwide until Dec. 20.

Retailers use temporary stores to sell limited-edition items and holiday fare or to reach shoppers in cities where they don’t have permanent outlets. Target, which has stores in the New York boroughs of Brooklyn, Queens, the Bronx and Staten Island, plans to open its first Manhattan location next year.

“They want to be prudent and make sure there is a market there,” Kimberly Picciola, a Chicago-based analyst with Morningstar Investment Services, said in a telephone interview. “For retailers going into bigger markets, it’s a big investment.”

Toys ‘R’ Us Inc., the country’s biggest toy retailer, opened pop-up Holiday Express shops this year to move Christmas gifts. J.C. Penney Co., the third-largest U.S. department-store chain, ran a pop-up store in 2006 in New York’s Times Square and this year opened a permanent location a few blocks away in Herald Square.

Comparable-store sales at Target fell 3.9 percent in the first three quarters of 2009 from a year earlier. U.S. sales at larger rival Wal-Mart Stores Inc., excluding fuel and its Sam’s Club membership warehouses, rose 0.5 percent in the same period.

Target, based in Minneapolis, climbed 94 cents, or 2 percent, to $46.93 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 36 percent this year, compared with a 22 percent rise in the Standard & Poor’s 500 Index. Bentonville, Arkansas-based Walmart has declined 2.5 percent this year.

Falling rents in Manhattan have made pop-up stores an attractive option for retailers looking to drum up holiday business. Store rents dropped in the third quarter in 7 of 10 districts in New York.

The Limited, the clothing chain owned by Sun Capital Partners Inc., has a pop-up this year in Soho. Wired magazine’s store opened Nov. 21 and will close Dec. 27.

“The idea is to benefit from more seasonal business,” Morningstar’s Picciola said.

Target opened its first pop-up in 2002, selling merchandise from a boat docked in New York’s Hudson River. The latest Manhattan pop-up is a structure standing at the intersection of Gansevoort and Washington streets, beneath the High Line, a derelict elevated railway that was converted into a park and opened this year.

Target, which has 1,744 stores in 49 states, plans to open about 10 new locations next year, and is considering using smaller formats in big cities.

“The pop-up store has been an overwhelmingly successful marketing strategy,” Joshua Thomas, a Target spokesman, said yesterday in an interview at the Manhattan location. “It’s not uncommon at all for products that we feature on our pop-up stores to sell out entirely.”

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