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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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"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.
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