Target to close 12 underperforming stores
- Target will shutter 12 stores on Feb. 3, at the end of its 2017 fiscal year, a spokesperson told Retail Dive on Tuesday.
- All eligible Target store employees at the affected locations are being offered the option to transfer to other Target stores, according to spokesperson Kristy Welker.
In 2017, Target opened 32 stores and the company has plans to open approximately 35 stores in 2018, she also said.
Generally speaking, the U.S. is over-stored and retail is in the midst of a dramatic correction. Target is in good company as it tries to "right-size" its store base. Macy’s is on pace to shutter 100 stores this year and many observers believe the number will grow, and J.C. Penney and Sears are also drastically reducing their footprint amid disappointing sales.
That doesn’t mean, however, that every store closure is a meaningful measure of any retail collapse, or a reflection of a well-honed strategy for that matter.
Target says that it is. The retailer's 12 planned closures are part of a "rigorous process in place to evaluate the performance of every store on an annual basis, closing or relocating underperforming locations as needed," Welker told Retail Dive. "Typically, a store is closed as a result of seeing several years of decreasing profitability."
The mass merchant is investing heavily in stores and CEO Brian Cornell last month said that it will revamp 325 more than originally planned — for a total of 1,000 of its 1,800 stores. The retailer is also opening 28 small-format stores this year, for a total of more than 130 by the end of 2019. Those are mostly centered in urban areas and, all told, new stores are seeing a 2% to 4% sales lift — more than twice a typical store where sales rose 1.3% last quarter.
That puts these closures in persecutive — and retail analyst Nick Egelanian, president of retail development consultancy SiteWorks International said they don’t add up to a "significant announcement in and of itself for a chain of this size."
But that doesn’t mean that Target’s brick-and-mortar strategy is optimal, he warned in an email to Retail Dive. "I do believe, however, that Target has lacked momentum and a clear strategy to move forward since its costly setback in Canada, and there still is little evidence it has found a footing," he said.
Walmart is similarly revamping existing stores and has pulled back significantly on new store openings, in contrast to retailers like dollar stores, off-price chains and smaller grocers Aldi and Lidl — all of which continue physical expansions. Walmart, which has embarked on a massive e-commerce push, announced its most scaled back brick-and-mortar growth the U.S. in some 15 years, opening 280 net new stores globally, with a focus on Mexico and China, executives said last month. In the U.S. that includes plans for 15 Supercenters and fewer than 10 of its smaller Neighborhood Markets stores.
"With Walmart having virtually ceased opening U.S. stores and chains like Lidl and Aldi advancing, it would seem like a golden opportunity for Target to reassert itself as a market leader," Egelanian said. “Nonetheless, Target continues to appear listless and rudderless."
- Minneapolis Star Tribune Target is closing 12 stores, including Hastings and Fergus Falls
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