Target Closing – The Reasons Behind the Decision


What Store Will Replace Target?

By Doug Dalager

I reached out to Mayor Bruce Hagen to inquire about the status of the Target property in Superior. As you may know already, the company has decided to close it’s Superior store as of January 30th, along with twelve other stores nationwide. An additional Wisconsin store, the Northridge store in Milwaukee, will also close.

According to Mayor Hagen, the City and the Chamber of Commerce are working with Target Corp and their real estate people in “casting a wide swath in seeking the right new business that will hopefully be a replacement retailer that provides the same product lines as Target.”

The announcement of the closing of “our” store was a shock to the entire community. According to the mayor, city officials conducted a conference call with Target Corp. to ask that they reconsider, but it was made “abundantly clear that their decision was final.”  The mayor still had many questions as to the “why” of the store closing. He believes that recent negatives surrounding the company had to have some play in the decisions to close some of their stores.

In 2014, Fox Business reported that according to those who follow the retail giant closely, Target has “been a slow-motion train wreck since the bottom dropped out of the economy in 2008.” Coupled with the huge data security breach that hit Target last year, and their unsuccessful entry into Canada, is the seeming lack of focus for the company as a whole.

Last year, Brian Sozzi, CEO of Belus Capital Advisors, said of Target, “they’re 1995 chic, not 2014 chic.” While shifting its retail strategy in the direction of building a grocery business, Target lost sight of its core general merchandise business. That core constitutes about 80% of the company’s sales. This has resulted in changes to store layout in order to provide floor space for fresh and dry food, while overall sales are flat.

As recently as August of 2015, Target CEO Brian Cornell was quoted in the StarTribune as saying that the chain’s stocking problems are unacceptable. In a conference call with business analysts, Cornell said, “over time, Target has developed an incredibly complex supply chain built to serve an outdated, linear model in which products flowed from vendors through distribution centers to stores.” This with the shift in consumers shopping habits to online options is at the root of Target’s woes.

So, they made the decision to close, apparently to stop the hemorrhaging, a problem made no better by opening 120 stores in Canada in 2013 that are not performing as hoped. Okay Superior, time to turn the page!

When asked who is interested in the property, the Mayor allowed that at this point there is only speculation and rumors. Despite rumors that L & M is moving into the space, Hagen stated that they are not a likely candidate as the City had been working with them on another large property in town.

However, L&M faded away when Fleet Farm announced that they are building in Hermantown. Apparently, L&M does not locate their stores near a Fleet Farm due to competition concerns. Planning Director Jason Serck confirmed the mayor’s  take on the situation, and said “the (Target) real estate will not go on the market for at least another month or two.”

The mayor hopes the city can attract a Shopko, Bed Bath & Beyond, Kohl’s, Trader Joe’s, a large sporting goods venue or other major retailer. At the end of the day, the Target store in Duluth is only a fifteen minute drive, so you can still get your “target” on after a short drive. Nonetheless, it would be great for Superior to obtain another large department store to avoid the drive and keep our shopping dollars within the city limits.

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