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Target’s Capital Plan: Deploy Diplomacy to Grab D.C. Retail Site

Target Stores is quietly negotiating with developers and city officials to buy space in Washington’s new D.C. USA retail complex.

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The future home of the DC USA retail complex and likely the first Target store in the nation’s capital

The future home of the D.C. USA retail complex and likely the first Target store in the nation’s capital.

Photo By Kyle Samperton

WASHINGTON — Target Stores has a knack for linking cultural largess to proposed new store openings. That’s exactly what the Minneapolis retailer has been doing in the nation’s capital this spring as it quietly negotiates with developers and city officials to buy space in the city’s new D.C. USA retail complex.

The property is being developed by GRID properties of New York, whose senior partner, Drew Greenwald, put together Harlem USA on 125th Street in Manhattan.

Target has been talking with District of Columbia officials since 1996, when it raised money to renovate the Washington Monument about locating a store in the city. But until now, all the store openings have been in the suburbs.

One indication that Target was finally serious about making good on that pledge came about six months ago when the chain, which three years ago turned down the offer, agreed to become the first retailer to fund an art exhibition at the National Gallery of Art, hosting a gala opening this month of the new Frederick Remington exhibit "The Color of Night," which is on display through July 6.

The night of the gala, Mayor Anthony Williams lauded Target for its commitment to the city before a crowd of U.S. senators, Supreme Court justices and art patrons. The night before the gala, corporate officials invited District government representatives to a private dinner in a local restaurant to discuss their plans to buy property in the new 546,000-square-foot retail mall in the Columbia Heights section of the city.

"It was kismet," said John Remington, Target’s vice president for special events and publicity, explaining his decision to sponsor the Gallery project after turning it down three years ago.

"They just weren’t ready. I don’t think they were quite invested in Washington," recalled Christine Myers, the Gallery’s chief of corporate relations, who talked to Remington about getting Target to sponsor the exhibit.

Target’s vice president, who noted that family lore claims a distant blood connection to the artist of the same surname, saw the show and liked the paintings, but he turned down the offer. Myers moved on and found a new sponsor.
"I can’t name the company, but six months ago, that sponsor decided to drop out. That’s when I again called Target," she said. "I explained what had happened and asked if they would help us out. They agreed to fund the exhibition."

Target’s second chance may have been kismet, but it was also a case of good business diplomacy.

About six months ago, Target was knee deep in negotiations for D.C. USA. The negotiations were fast becoming more complex, as Target moved toward the idea of buying rather than leasing the 165,000 square feet for its shell.

GRID Properties had also been negotiating with Bed, Bath & Beyond, Models Sporting Goods and other stores that typically locate with Target to lease the additional 320,000 square feet of retail space. The remaining space will be used for an underground parking garage. Local residents hope Target will create a shopping center similar to the Mazza Galleria mall near the Friendship Heights Metro on the Chevy Chase border with Maryland.

Plans for luring Target to Washington got a big boost when GRID came up with the idea for developing the property currently owned by the city and managed by the National Capital Revitalization Corporation. Officials in the District’s Office of Planning & Economic Development immediately thought of Target.

At the 2003 Retail Advertising Conference in Chicago in February, Michael Francis, senior vice president of marketing at Minneapolis-based Target Corp., said Target wants to create the most buzz in New York, Washington, Chicago and Los Angeles, during a presentation on the discount retailer’s marketing and advertising strategies.

He said buzz is part of Target’s strategy to keep its core consumer and attract a younger base. He said the retailer’s frequent shoppers sport demographics similar to those of department stores: They’re about 44 years old, on average, and have a household income of $54,000. Eighty percent have gone to college, 41 percent have kids, and 80 percent are female, which is why Francis used female pronouns throughout his 45-minute talk.

The fast growing national chain saw its pre-tax profits, before certain items, rise 8.1 percent to $1.17 billion in the fourth quarter ended Feb. 1. Sales at the division increased 9 percent to $11.93 billion, despite a 1.1 percent comp decline.
District officials broached the idea with the Minneapolis retailer at last year’s International Convention of Shopping Centers in Las Vegas.

"It had always been a question of finding the right spot," said a spokesman for the Office of Planning & Economic Development. "We are also negotiating for a first source hiring agreement specifying that all the initial retail jobs come from local residents."

Around the time of the National Gallery’s second call seeking Target’s corporate backing, Washington neighborhood associations had also begun voicing concerns about plans for the new store, saying its long, blank facade would be too large for the site. Target officials argued the facades would be broken up with windows, entrances and small retail spaces set aside for local entrepreneurs, and parking will be underground. In addition, Target has talked to local neighborhood representatives about its reputation for supporting inner-city job training programs.

So in the good neighbor spirit, Target officials took advantage of their Washington social event to invite the local neighborhood committee officials along to the National Gallery.

The night before the gala opening, Target officials hosted a lower-key dinner at the Bella Roma Restaurant in the grittier Columbia Heights part of town to talk with local government officials and neighborhood organizations about their plans to open a large new downtown store and retail mall. Then they invited those guests to come along to the National Gallery party the next night where Mayor Anthony Williams would speak about the new store.

"It’s great because we won’t have to drive to Virginia anymore," said Charles E. Matiella, a member of the local neighborhood association, who attended Target’s dinner for neighborhood officials, where he got an invitation to drop by the National Gallery’s reception.

But when Matiella started to enthuse about Target coming to Washington, he was shushed by a Target employee.

"Target has expansion plans to open up a dozen new area stores in the next five years with one to be D.C. USA, but there is nothing definite yet," said Remington as he turned to focus on the art.

City officials figure if all goes well, Target will be making a public announcement of plans for the new retail space in the fall.