Target’s plan to shed several thousands of positions over the next two years is certain to have a ripple effect on downtown and the region’s economy.
The corporation is downtown’s largest employer and the state’s fourth largest company. Its bullseye brand is ubiquitous in the city.
Target announced plans Tuesday to layoff 1,700 employees and permanently close 1,400 vacant positions, said Molly Snyder, a spokeswoman for the corporation.
“While today’s news is difficult, it’s important to know that we will continue to make investments in our business and team — particularly in areas such as digital, personalization, data and analytics, and engineering — to position Target for future success,” she said. “Our goal is to treat all affected team members with the respect they deserve. Therefore, Target will provide each individual with a comprehensive package including more than 15 weeks of pay plus additional severance based on years of service.”
Laid-off employees will also receive career outplacement support, access to free executive education courses and a portion of their benefits coverage paid by Target for the next six months, Snyder said.
“Today is a very difficult day for the Target team, but we believe these are the right decisions for the company,” she said. “We will continually review opportunities to control cost and fuel growth.”
The reboot plan was announced by Target leaders at a meeting March 3 with investors in New York City. Target Chairman and CEO Brian Cornell said the new roadmap comes after a “thorough, strategic review” of the corporation’s business and the “changing retail landscape.”
“We’re focused on our future and building the capabilities that will take us further, faster,” he said. “Redefining Target will require a renewed emphasis on prioritization and innovation, and above all else, putting our guests first in everything we do.”
Before the cuts, Target had about 10,000 employees based at its Minneapolis headquarters.
Government and business leaders have expressed sympathy for those who will be impacted by the layoffs at Target, but spoke with optimism about how downtown will weather the major restructuring of its largest employer.
Gov. Mark Dayton and Lt. Gov. Tina Smith met with Cornell to discuss the layoffs March 9. The governor has raised concerns about the cuts and suggested other states might recruit laid-off workers away from Minnesota.
After the meeting, Dayton said Cornell assured him that Target is committed to the state.
Dayton’s family opened the first Target store in Roseville in 1962, but is no longer affiliated with the retailer.
The pending layoffs come as many new high-end rental developments have recently opened downtown and more are in the pipeline. A renovation of the Nicollet Mall is also nearing fruition and Downtown East is poised for a major transformation with the new Vikings stadium, Wells Fargo towers and the Commons.
Mayor Betsy Hodges called Target a “great Minnesota company” and noted that “all great companies go through ups and downs.”
“Target is resourceful and resilient, and I know that it has the ability to weather this setback,” she said. “My thoughts are with Target’s talented employees at this challenging time.”
Hennepin Theatre Trust CEO Tom Hoch, the new chair of the Minneapolis Downtown Council/DID board of directors, said Target and its employees are “a cherished and important part of our community.”
“The loss of so many jobs is surely devastating for employees and certainly impinges on the vitality of our Downtown,” he said. “But, the overall health of Target is also important and all of us in Minneapolis both want and need Target to be vibrant and successful. Every single member of our community — business, government, schools, cultural organizations — is behind Target as they forge their path to improved performance.”
Carl Runck, director of development at downtown-based Ryan Cos., said overall downtown’s Central Business District has about 160,000 workers and new companies are on the way.
“Despite this news, the inflight of knowledge workers wanting to work and live in downtown Minneapolis is a trend that is here to stay,” he said. “Dozens of companies including Be The Match, Aimia, Young America, Weber Shandwick, Eide Bailly (among others) have recently chosen to relocate downtown to attract and retain top talent. Downtown’s other largest employers including Wells Fargo, US Bank, and Ameriprise continue to grow and invest here.”
He predicted downtown’s newest housing developments would be “minimally affected” by Target’s layoffs.
“Nearly half of residents in the new generation of projects are reverse commuters who work at employers in the suburbs and opt to live downtown for its amenities and active lifestyle,” he said. “Apartment and condo communities downtown are not solely dependent on proximity to CBD employers.”
Fritz Kroll, a real estate agent with Edina Realty’s downtown office, said he’s also hopeful the residential real estate market will remain strong.
“In my experience, Target employees are the most likely to live downtown,” he said. “They tend to be urban, from other cities, and can afford to live in the city. There are many other companies that are hiring, and I hope that many of those laid off can find other jobs downtown.”
As for downtown retail, Andrea Christenson, vice president at commercial real estate firm DTZ, said she anticipates retailers closest to Target’s headquarters on the south end of Nicollet Mall will be most impacted by the job losses, including the Target store at 9th & Nicollet.
Overall, she predicted the changes at Target would have a “negligible” effect on downtown retailers because residents make up an increasingly larger chunk of the shoppers downtown.
“You hate to see these jobs go away, but we have a diverse economy,” she said.
As for its reboot, Target will focus on continued growth in digital sales and prioritize style, baby, kids and wellness as its key merchandise categories. Those four categories accounted for more than a quarter of Target’s sales in 2014, according to a statement released by the company.
It will also focus on launching more of its smaller urban stores, TargetExpress and CityTarget. Target has 1,795 stores in the U.S.
The changes are expected to save Target $2 billion over the next two years, according to Target leaders.
“While we’re in the early days and there’s no doubt that transformation can be challenging, we’re taking the steps necessary to unleash the potential of this incredible brand,” Cornell said. “I’m encouraged by our early momentum, and am confident that by implementing our strategy, simplifying how we work, and practicing financial discipline, we will ignite Target’s innovative spirit and deliver sustained growth.”
The latest news of Target’s restructuring plans follows its decision to pull out of Canada. The retailer announced in mid-January its plans to discontinue operating its 133 stores in the country and cut 550 jobs in Minnesota.
The pending cuts are the deepest ever made by Target Corp. Besides the recent layoffs tied to its Canadian business, it laid off 600 workers at its corporate headquarters in 2009.