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James Cole passes Mervyns on his way to the nearby Target in Madison Heights. The discount retailer says it's closing all of its Michigan stores as part of a large consolidation plan.Mervyns pulls out of Michigan
Competition, vague image are blamed
A customer shops at Mervyns in Madison Heights. Mervyns is the latest retailer to exit Michigan, dealing a blow to the battered retail market. About 1,100 workers are expected to lose their jobs.
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An undefined image, poor marketing and heated competition helped push Mervyns out of the Michigan retail market.
The Hayward, Calif.-based discount department store chain said Wednesday that it will close all 15 of its Michigan stores by February -- including nine in Metro Detroit -- and lay off 1,108 workers.
The move is another blow to the state's retail industry and comes as Michigan is trying to energize its stagnant economy and stem job losses that have led to the highest unemployment rate in the nation.
Christina Welsh of Madison Heights, had not yet heard news of the closings when she went to pick up her paycheck Wednesday at the Mervyns in Madison Heights, where she works in the women's department.
"I'm very surprised that it's closing," said Welsh, 26. "I'm in shock. We always had business, it seems, a lot of sales."
The Michigan closings are part of a bigger restructuring that will close 62 unprofitable Mervyns stores and two distribution centers in eight states and eliminate 4,800 jobs so the chain can focus on strengthening its high-growth, money-making operations in the West and Southwest.
Mervyns will exit the Michigan and Oklahoma markets, and close stores in Colorado, Louisiana, Texas, California, Oregon and Utah, leaving 193 stores in 10 states. It will be the largest consolidation in the company's history.
"We're making some difficult but necessary changes that will enable us to concentrate our resources on Mervyns' core markets and make investments that allow us to better serve our customers," said Beryl Buley, executive vice president of retail operations. "While we are saddened to say goodbye to our associates that have served customers in the communities we are leaving, we are confident that these decisions are right for Mervyns' future."
Ed Nakfoor, a Birmingham-based retail consultant, said Mervyns never created an identity or a niche in Michigan. It became "a midrange store that got lost in the middle."
"I don't think there was ever a bond established," Nakfoor said. "I don't think (shoppers) would be mourning the loss of Mervyns like they would a home-grown store. What is Mervyns? I can't recall the last time I was there."
Mervyns reviewed all of its markets and store sales over the past six months and decided that Michigan simply wasn't profitable, Buley said. Michigan has the third largest number of the chain's stores, just behind California and Texas.
"We're not profitable nor can we see being able to be profitable in Michigan," Buley said, noting that it wasn't a lagging state economy that drove Mervyns out. "It's a situation where Michigan competition has grown and moved into suburbs and Mervyns hasn't. The sales base is not what it needs to be to be profitable."
Still, the chain has loyal Metro Detroit customers.
Carol Bassett, 63, of Canton shops at Mervyns every week at various locations. On Wednesday, she was in Madison Heights, where she bought a pair of sandals on sale for $13.
"I'll miss it," Bassett said. "I like the discounts. I love their shoes, home goods and dresses. I'm sad to see it close. I hate to see any stores go."
Mervyns is a midsize retailer that competes largely with Kohl's, another discount department store chain with a product lineup that includes fashions and housewares. After steadily losing market share for years, Mervyns was sold last year by Target Corp. to a private investment consortium for $1.65 billion.
Mervyns arrived in Michigan in 1987. Today, the state's struggling economy and sluggish population growth has kept many retailers from setting up shop in the state, retail analysts said.
Mervyns becomes the latest retailer to leave Metro Detroit and Michigan amid intensifying competition from big box national retailers and discounters such as Wal-Mart and Target.
The departures include Frank's Nursery, the 70- year-old Troy lawn and garden specialty retailer, which closed 169 stores in 14 states last year, including 33 in Michigan after filing for Chapter 11 bankruptcy protection.
This year, Home Depot and Circuit City have shuttered Michigan stores. Kmart has closed the doors on some area outlets since merging with Sears, Roebuck & Co. in March. And Farmer Jack is searching for a buyer that will keep most of its 71 southeast Michigan stores open after its parent, The Atlantic & Pacific Tea Co. in New Jersey, said it wanted to get out of the Michigan to focus on core operations on the East Coast.
Michigan has been steadily losing department store jobs since the exuberant economy of the late 1990s and 2000, when the number of department store workers hit an annual average of 70,000, according to the state's Bureau of Labor Market Information. Last year, the annual average was 67,700.
In July, the latest month in which figures are available, there were 58,000 department store workers in Michigan, down from 59,000 a year earlier and 67,000 five years ago.
Mervyns' Michigan job cuts include about 218 full-time positions and 890 part-time jobs. Nationally, the chain is laying off 1,200 full-time workers and 3,600 part-time employees.
Nakfoor is optimistic, however, that other retailers will open in Mervyns' place.
"In the long term," he said, "it presents an opportunity for a stronger retailer to snap up some of those sites and for some of them to be redeveloped."
Louis Aguilar and Tenisha Mercer contributed to this report. You can reach Dalia Naamani-Goldman at (313) 222-2536 or dgoldman@detnews.com.
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