After opening its doors in 2015, a Memphis, Tennessee e-commerce distribution center for Minneapolis-based Target is closing its doors, laying off 486 Radial employees as the retailer undergoes the process of revamping its e-commerce strategy. Radial is a third-party logistics firm that operates the Target facility.
“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, according to Twin Cities Business. “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.”
News of the 914,000-square-foot Memphis facility’s closure broke after Radial filed a Worker Adjustment and Retraining Notification (WARN) notice with Tennessee’s Department of Labor and Workforce Development on January 30th. Companies are required by the federal WARN Act to give 60-day notice for layoffs involving more than 100 employees.
While initially committing to spending $52.3 million on the facility and pledging to create 462 jobs with an average salary of $28,456 when the Memphis site was first selected, the closing of this site ends a 15-year agreement that provided $12.2 million in tax abatements with public subsidies.
After introducing the Memphis location to the Target family of facilities in 2015, with the intention of improving shipping for online orders, Target CEO Brian Cornell unveiled a new strategy in 2017, instead choosing to allocate $7 billion to redesign many Target stores. Redesigns of these stores go hand-in-hand with Target’s strategy to ship online orders directly from stores—this includes separate entrances built especially for customer pick-up for 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.
How will this redesigned e-commerce strategy assist in the company’s continued foray into the food industry? Deli Market News will keep you updated with the latest!