Crain's Chicago Business

If Target Corp. sticks to its threat to halt expansion in Chicago, it can rule out 27-year-old Smita Kini as a regular customer.

The Edgewater resident, who has no car, shopped at Target only a couple of times since she came to Chicago last year. Before moving from suburban St. Louis, she had a car and shopped at Target at least a couple of times a month

Even a new Target on West Peterson Avenue, about 2 miles from her apartment, feels like a trek for Ms. Kini, who shops instead at the Dominick's Finer Foods and Jewel stores down the street.

Target "is not conveniently located for me," Ms. Kini says. "If I were to buy a big item, I don't know how I would bring it back. It limits my purchasing ability."

The retailer, which has eight stores in the city, has put on hold plans to expand since Chicago passed a big-box wage law requiring higher minimum wages and benefits starting in July 2007. Mayor Richard M. Daley is considering vetoing the measure.

MISSED MILLIONS

Without more stores, consultants estimate, the retailer could miss out on hundreds of millions of dollars in annual sales to city-dwellers. Having saturated the suburbs, Target is looking to urban areas as the last untapped territory for expansion.

Generally, big-box retailers in urban areas draw shoppers from a radius of 2½ miles to 5 miles, says Michael Moriarty, vice-president of the retail consulting practice at A. T. Kearney Inc. in Chicago. Target has yet to really penetrate well-heeled neighborhoods like Lincoln Park and redeveloping areas such as Hyde Park.

Even if Target builds more stores in suburbs bordering the city, they aren't likely to draw tens of thousands of Chicagoans who don't have the time or inclination to leave their neighborhoods to buy groceries, clothes or household goods.

Target could comfortably grow to 12 to 15 city stores to serve a population of more than 2 million, says C. Britt Beemer, chairman of America's Research Group Ltd., a South Carolina-based consumer research firm.

Each new store would add more than $50 million in yearly sales, says Chicago-based retail consultant John C. Melaniphy.

Target, which did not return calls, caters to younger shoppers with high incomes, and expanding in neighborhoods with a high density of professionals wanting to buy cheap, chic goods is key, says Alisa Joseph, vice-president of advertiser marketing services in Chicago for New York-based Scarborough Research.

"There's a huge revitalization of Chicago going on," Ms. Joseph says. "Target is missing out on that opportunity."