Target Shutters 914,000-Square-Foot E-Commerce Distribution Facility
MINNEAPOLIS, MN - After less than three years, Minneapolis-based Target is shutting the doors on its e-commerce distribution center in Memphis, Tennessee. The closing will lay off 486 Radial employees—Radial is a third-party logistics firm operating the Target facility—as the company revamps its e-commerce strategy.
“While Target does not disclose details about relationships with vendors, I can confirm we are not renewing our contract for e-commerce fulfillment at the Memphis facility,” said Eddie Baeb, Senior Manager of Communications and PR for Target. “The decision comes as Target is making significant long-term investments in our team and business. As part of these efforts, we have enhanced the capabilities of Target-operated distribution facilities and expanded the number of stores we use to ship online orders. We will shift the online order capacity from Memphis to Target facilities and to our stores – so that we can provide more efficient and faster deliveries to Target guests.”
After Radial filed a WARN notice on January 30th with Tennessee’s Department of Labor and Workforce Development, news broke of the 914,000-square-foot Memphis facility’s closure. Companies are required to give a 60-day notice for layoffs with more than 100 employees by the federal Worker Adjustment and Retraining Notification (WARN) Act.
When Target first selected the Memphis site, the retailer had committed to spending $52.3 million on the facility and pledged to create 462 jobs with an average annual salary of $28,456. And with public subsidies provided, Target entered a 15-year agreement calling for $12.2 million in tax abatements; however, the closure of the site effectively ends the incentives agreement.
While the Memphis location had been a part of the retailer’s 2015 plan to improve shipping for online orders, Target CEO Brian Cornell revealed in 2017 a change of plans, allocating $7 billion to redesign many of its stores instead. The redesigns are part of Target’s new strategy to start shipping online orders directly from stores and include building separate entrances for customers to pick up online orders and groceries.
“Target is focused on turning their stores into these mini-fulfillment centers,” said Ben Antenore, an analyst from Kantar Consulting, a global sales and marketing consulting firm, according to Twin Cities Business.
Will Target’s revised e-commerce strategy mean more closures in the future? AndNowUKnow will continue to report as the story unfolds.
