What: Target has become a department store in the traditional sense of the term

Why is it important: Big boxes and discounters have stolen share from department stores for years and now Target is stealing their merchandising playbook too

Target is reportedly to take over Macy’s space at the Water Tower Place shopping centre in Chicago. Before Macy's, that store was a Marshall Field's and some Chicagoans have never forgiven Macy's for its takeover of their beloved retailer. Now, the idea of replacing Macy's with a Target is creating buzz and controversy. And for some, urban Targets meet the needs of today's urbanites, the way the original wave of Chicago department stores, like Marshall Field, did in the 20th century. If Target was to take over Macy’s, it would be an illustration of how Target has usurped the traditional department store.

"Target has become a place where consumers go to discover new things," GlobalData Managing Director Neil Saunders said. "This used to be at the heart of what department stores were, merchants which brought a world of interesting products within easy reach of consumers." In their heyday, department stores were true emporiums, with varied merchandise. As they gave up sales in many categories, those departments usually filled up with more apparel, a highly lucrative market that now has its own problems.

Now many of the players that have taken share from department stores are adopting tactics from those old retailers such as carving up their spaces to facilitate browsing, taking down partitions, introducing vignettes, well place little breaks, etc... The retailer this month said it's dedicating a part of a USD 4 billion plan to remodel more stores. As part of a USD 7 billion overhaul of its stores and private labels launched four years ago, Target has disrupted its aisles to exhibit home goods and apparel so that shopping is easy and pleasant.

Pop-ups from third-party brands have also appeared not just back into department stores, but also at specialty big-boxes like Target. In recent months, were announced dedicated spaces for Apple, Ulta, Levi's or DTC like Casper. Disney has announced the closure of 60 stores in North America but has ramped up its shop-in-shop locations, including at Target.

As department store consolidation continued through the late 20th century and into the 21st, many department stores' private labels disappeared. Now mass merchants have discovered the power of private brands, which differentiate their merchandise from names that might be found anywhere and provide fatter margins.

Target has excelled at this. Steady introductions in the last five years have appeared throughout its assortment, from commodities like food and consumer products to more discretionary items like home goods, luggage and apparel. They've been lucrative: The company's new activewear line notched USD 1 billion in sales in its first year and is the 10th billion-dollar private brand in its portfolio.

"We saw this with J.C. Penney which, despite having the phenomenally successful Sephora shop-in-shop concept, failed to reignite its core business," Saunders said. "Sephora certainly drove traffic to JCP stores, but very few of those consumers were big spenders at J.C. Penney itself. In contrast, Target has a very strong underlying business so its partnerships are really icing on the cake. It is all very well having other brands and concepts come in, but retailers should also be innovating themselves. Target does, but many others do not."

Who's the 'department store' now