Target’s Standing Dead Monster

Blame it on the midseason premiere of “The Walking Dead,” but we’ve got zombies on the brain (all puns purely intentional). Maybe that’s why a recent article in Los Angeles Times on the so-called “zombie” Target project in Hollywood caught our eye.

It’s striking just to think about: a Target store, usually the center of so much retail activity, home to so many red carts that come and go from the parking lot — depositing their bounty of cleaning products, home goods, clothing, toys, electronics, groceries, pet needs and more — sitting eerily empty.

The Hollywood location is not ground zero for a zombie apocalypse; it is the victim of poor adherence to zoning laws and a bureaucratic showdown between city council, county judges, local businesses and the store’s developers. In summation, as the L.A. Times article explains, the three-story shopping structure has stood partially constructed and empty on Sunset Boulevard since Aug. 2014, when a judge struck down the city council's approval of the project that allowed the structure to be built to a 74-foot height, in an area where 35 feet is the standing ordinance on commercial building height. The judge said the council should not have approved the project to begin with.

According to LAT, Los Angeles Mayor Eric Garcetti’s appointees on the Planning Commission recently voted to require that Target Corp. fund a 3,895-square-foot child care facility within a mile of the building site in order for them to grant the project’s approval. In case you were wondering where Target stood on such a demand, the retail chain’s response, filed with the city by Target representatives, calls that demand “excessive, impractical, illegal, erroneous and an abuse of discretion.” Instead, explains the LAT story, the company would rather make a one-time payment of $407,619, with other businesses at the shopping center chipping in $76,381, to support a child care facility in the area. Seems reasonable enough.

As the negotiations rage on, Target finds itself in something of a jam — and with something of an image issue. Regardless of why the space remains partially built and unopen for business, one can’t help but look at the construction site and wonder if this is the future of Target stores.

It’s hard to imagine such a fate befalling the retail giant. But similar things have been said in decades past about household name retailers, such as Kmart, Sears and Woolworths, the latter of which closed the chapter on the American five-and-dime in 1997 when it shuttered its remaining 400 stores and brought to an end the company’s nearly 70-year operation.

Sears Corp., which owns and operates both Kmart and Sears brands, has been on the “brink of collapse” — some argue — for decades (as referenced by its mention in the 1997 article above) but has managed to hang on, if only by a thread, to a small retail footprint. According to a recent article in Bloomberg that cites a recently released analyst report, the company is no longer viable, and a collapse is imminent. Sears recently reported $50 million to $100 million in losses for the fourth quarter. That’s compared with $125 million by the same measure a year ago, shares the outlet. “Sears margins were worse than we thought as a tough retail climate accelerated margin decline,” the analysts said in the report. “A liquidity event is a matter of when, not if.” Sears’s stock fell to $15.25 earlier this month, trading at the lowest level since 2004, according to Bloomberg.

Which is all to say that the fall of retail giants in the U.S. market is closer to a general rule than an unheard-of exception. And we don’t need to look very far to find signs that Target may not be a sure bet forever. Target Corp.’s failed attempt to expand to Canada was telling, to say the least. In the end, the retailer faced a combination of supply chain and IT infrastructure problems that proved insurmountable, and the brand ended up shuttering all 133 stores and laying off more than 17,500 employees in the Great White North.

How could a seemingly indestructible giant like Target fall so easily and so quickly? It is a testament to the fragility of the market at any given moment and the fine line that any retailer walks between booming and busting. The “zombie” Target in Hollywood may be dismissed as the casualty of red tape and warring municipal factions, or it might more accurately be Target’s very own ghost of Christmas future. Let it stand as a reminder to us all ... and, if you happen to live in Los Angeles, let’s also hope it opens soon, because the city’s denizens are sick of having to schlep to the Valley to visit a decent-sized Target.

It’s difficult enough in L.A. to deal with the unseasonably warm weather — something we’re sure that residents of, say, the American northeast can relate to right now.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.