Radial, Inc., an e-commerce company that specializes in running fulfillment centers, where companies can ship and store goods ordered online, will be cutting nearly 500 workers as part of a Target fulfillment center closing in Memphis, Tennessee.
The Radial layoffs will impact 486 employees, according to the company’s Worker Adjustment and Retraining Notification (WARN) notices. Those layoffs in Memphis are set to start on April 7 and conclude by the end of the month, according to the WARN notices.
“Radial will cease our operations from the Memphis, TN fulfillment facility on or before April 30, 2018,” said Radial president and CEO Pierre Winand, adding that the company regularly adjusts its fulfillment and customer service footprints based on changing client demand.
The Radial job cuts follow the company’s announcement last July that it would hire 3,000 seasonal workers. The company had already added 3,000 temporary workers in the fall of 2016, keeping 1,000 on full-time. Therefore, the Radial layoffs will not only affect the hundreds of current employees, it will stunt growth in the area, because the company was a frequent provider of both seasonal and full-time work.
Radial is a relatively young company, having been formed when Innotrac Corporation merged with eBay Enterprise in 2016. Innotrac had signed a third-party contract to manage Target Corporation’s (NYSE:TGT)’s Memphis distribution center, which then transferred to Radial when the company merged.
Target Corporation Closing Fulfillment Facility in Memphis
A Target spokesman confirmed that the company was not not renewing its contract for e-commerce fulfillment at the Memphis facility
“The decision comes as Target is making significant long-term investments in our team and business,” said the spokesman. “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.”
With Radial being a Target third-party logistics party, it is likely to face some of the setbacks that have plagued the retail giant in recent years. The brick-and-mortar retail industry as a whole has been faced with a difficult economic climate, with online shopping and e-commerce eating away at sales.
While Radial hopes to take advantage of the shift in consumer habits by operating fulfillment centers, larger clients such as Target will likely have to make cutbacks in the coming years as their sales continue to decline.
Implications of the Target Fulfillment Center Closing
With the closing of the facility, it seems that all parties involved, from Radial to Target to the county, will take a hit.
The logistics company layoffs have implications for a tax deal brokered between Target and the county government. With the Target fulfillment center closing, that tax deal with the county will come to a close.
In late 2014, the city-county agency Economic Development Growth Engine (EDGE) awarded Target a 15-year payment-in-lieu-of-taxes incentive to lease the 900,000-square-foot warehouse that is now set to shutter.
At the time that the deal was arranged, Target had claimed that it would create 462 jobs and invest $52.3 million in the facility. EDGE estimated that the facRadial, Inc.ility would generate $27.3 million in tax revenue over a 15-year period, while Target would be spared $12.2 million in taxes.
The Radial layoffs are therefore, part of a bigger challenge facing traditional retailers like Target, which are still trying to find ways to adapt to the new economic landscape.
“WARN Notice,” State of Tennessee Department of Labor and Workforce Development, January 30, 2018.
“Target Fulfillment Center Closing, Vendor Laying Off 486 Memphis Workers,” The Daily News, January 30, 2018.
“Radial to lay off nearly 500 Memphis workers,” News Channel 3, January 30, 2018.