Target to Open In-Store Apple Shops: Will It Pull from Mall Traffic?

At a time when many retailers have struggled for revenue, Target (NYSE: TGT) has been an absolute powerhouse. Not only has the big-box giant reported strong earnings throughout the pandemic, but it’s also continued to innovate in an effort to increase its customer base.

Late last year, Target announced that it would be partnering with Ulta Beauty (NASDAQ: ULTA) to open makeup shops inside its stores. And now, Target has found an equally strong partner to team up with: Apple (NASDAQ: AAPL).

Bad news for malls

Target is planning to open dedicated Apple stores in 17 different locations and then intends to expand its Apple shop-in-shops later in the year. While Target already carries an extensive line of Apple products, this move will set it apart as a tech destination for shoppers. Furthermore, Target employees who work in its in-store Apple shops will receive specialized training from Apple so they’re better equipped to help customers navigate purchase decisions and handle issues with existing products.

This partnership puts Target in a strong position to retain customers and attract new ones. And while that’s good news for Target, as well as the many shopping centers that count on the retail giant to serve as an anchor tenant, it’s pretty bad news for malls.

The more appealing a shopping destination Target becomes, the less inclined customers will be to take their business to malls. And given that consumers are already wary about shopping in malls due to coronavirus-related concerns, that’s a hit malls can’t afford.

This news from Target also coincides with Apple’s recent announcement that it will be reopening all of its stores in full. For much of the pandemic, Apple stores were fully or partially shuttered, but now, its line of 270 stores will begin welcoming shoppers once again (though some locations can only be visited by appointment). This development is a positive one for malls, as Apple stores have the potential to draw in customers. But if Target’s Apple stores really take off, they could pull a host of consumers away from malls at a time when they can’t stand to lose out on any more foot traffic.

In addition to offering customers a wider selection of Apple products, Target will also allow customers to use its same-day delivery or curbside pickup options to retrieve their Apple purchases. That’s a benefit that’s hard to beat, which is why Target is poised to become an even bigger threat to malls as it continues to innovate and find new ways to become the ultimate one-stop-shopping destination.

The Millionacres bottom line

Target already has the benefit of being an essential retailer — something that allowed it to stay open during the pandemic when so many other stores were forced to shutter. But the fact that it continues to build strategic partnerships could really give it an edge. Investors in mall real estate investment trusts (REITs) may want to consider diverting some resources to shopping centers if Target continues to grow its brand, leaving malls in its dust.