NEW YORK — The retail megamergers of the past few months might improve the bottom line for companies like Sears Holdings Corp. and Federated, but in their wake they have the potential to leave cities without a financial anchor.
Just as the retail giants will reorganize nameplates and rebrand their front-office operations, Sears Holdings Corp. (the merged company of Sears, Roebuck Co. and Kmart Holding Corp.) and Federated Department Stores (which is acquiring May Department Stores) are expected to consolidate their corporate headquarters, back office and buying and distribution operations. For Hoffman Estates, Ill., the hometown of Sears, Roebuck & Co., and St. Louis, the hometown of May Department Stores, this could mean major job losses.
For example, Sears has 5,700 employees in Hoffman Estates, a northwest suburb of Chicago. It is by far the largest employer in the city, making up nearly a third of its entire employee base. Last week Sears filed a notice with the Illinois Department of Commerce and Economic Opportunity that it plans a “mass layoff” of at least 250 people. It is said that the company will let go of more than 500 employees.
“If Sears leaves their corporate campus or lets go of a ton of jobs, certainly surrounding retail and restaurants and hotels will be effected hard,” said Doug Shehan, vice president of the Trammell Crow Co., a commercial real estate broker in the Chicago suburbs. “It’s such a small community.”
Sears is also a major landlord and developer. It owns 200 acres in the Prairie Stone Business Park, where it owns its 2.5 million-square-foot office campus. It has sold and developed other plots of land to other corporations.
“It’s our understanding that some people will be laid off but that Kmart personnel will be coming down from Michigan to fill the building,” said Mark Koplin, project manager for the economic development area where Sears is located in Hoffman Estates.
Without these major corporations in place, the cities might also suffer a lack of visibility from the business community at large, making it more difficult to attract corporations to take their place.
In St. Louis, where the new Federated-May entity has not yet made any formal announcement of layoffs, the fallout seems less apparent. If the company does eventually decentralize out of St. Louis, it could be particularly hard-hitting for May, whose corporate culture kept buying operations and much executive decision-making close to the vest in St. Louis.
Federated, with headquarters in Cincinnati and New York, has said it plans to locate the headquarters of one of the major operating divisions in St. Louis. It has not yet named which operation.