VOL. 133 | NO. 24 | Thursday, February 1, 2018
Target Fulfillment Center Closing, Vendor Laying Off 486 Memphis Workers
By Andy Meek
A Target fulfillment center in southeast Memphis is closing in April, resulting in 486 layoffs.
Radial, a third-party logistics firm that manages the distribution center for Target Corp., has filed notice with the Tennessee Department of Labor and Workforce Development that the permanent layoffs at its 5461 Davidson Road facility will start April 7 and continue through April 30.
A spokesman for the city-county Economic Development Growth Engine, the local agency that grants tax incentives for economic development projects, told The Daily News, "It is EDGE's understanding that the Target distribution center located at 5461 Davidson Road will be closing permanently."
EDGE awarded Target Corp. a 15-year payment-in-lieu-of-taxes incentive in late 2014 to lease the 900,000-square-foot warehouse formerly occupied by Hamilton Beach. At the time, the Minneapolis-based retailer said it planned to create 462 jobs and invest $52.3 million in the facility, which is located on 25 acres on the west side of Lamar Avenue south of Holmes Road.
The tax break is also being terminated, per EDGE.
When EDGE granted the PILOT in 2014, it estimated the facility would generate $27.3 million in tax revenue over 15-year period while saving the company $12.2 million in taxes. "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,” a Target spokesman confirmed to The Daily News. "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."
Shuttering the Memphis facility comes as Target has been looking to shore up its same-day delivery capability, which got a boost at the end of 2017 with the announcement Target was buying the grocery delivery service Shipt for $550 million. Earlier in 2017, Target also bought a delivery logistics company to offer same-day service to in-store shoppers.
Shipt charges a membership fee and in turn lets users send “shoppers” out to a store to pick up items and deliver them to the user. Target said at the time it expects to offer Shipt’s capabilities at most of its stores by the 2018 holiday shopping season.
The company that had been managing the Target facility in Memphis, meanwhile, went through some changes of its own prior to this week’s announcement.
Innotrac, the third-party contractor Target hired to manage the Memphis distribution center, merged with eBay Enterprise in 2016 to form Radial. Last summer, Radial made a push to hire 3,000 seasonal workers for the Memphis fulfillment center in anticipation of e-commerce growth and a busy holiday shopping season.
"Radial will cease our operations from the Memphis, TN fulfillment facility on or before April 30, 2018," Radial president and CEO Pierre Winand said in a statement to The Daily News, adding that the company regularly scales or reduces its fulfillment and customer service footprints in coordination with client demand.
"Upon the end of their contract," he continued, in reference to the Target center in Memphis, "one client has made the decision to insource within its B2B supply chain the delivery of online product going forward, which was the impetus for the closure of our operations in the Memphis, TN location."
Since Target's investment in the center, the Shelby County Assessor's appraisal of the site has increased 62 percent – from $18.5 million in 2014 to $29.9 million in 2017. Based on the assessor's property tax calculator, the 2017 tax bill without the benefit of the PILOT would be about $491,461 in county taxes and $391,193 in city taxes, for a total of $882,654.
The property owner, per the 2015 quitclaim to EDGE as part of the PILOT, is Memphis Industrial Park Investors Inc., which is affiliated with Hartford, Connecticut-based UBS Realty Investors LLC.
Associate editor Kate Simone contributed to this report.