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'Another empty building' expected as Mitchell's JCPenney to close

The day a national announcement was made signaling the end of JCPenney's tenure in Mitchell, morale in the store was somber. The Mitchell JCPenney store, located in the Palace Mall on Main Street, is one of 138 stores nationwide closing, the comp...

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JCPenney has announced its Mitchell location inside the Palace Mall will be one 138 stores closed nationwide. (Matt Gade / Republic)

The day a national announcement was made signaling the end of JCPenney’s tenure in Mitchell, morale in the store was somber.

The Mitchell JCPenney store, located in the Palace Mall on Main Street, is one of 138 stores nationwide closing, the company announced Friday, as part of “a continuing effort to have sustainable growth and long-term profitability.”

“Sometimes we come down (to Mitchell) just for JCPenney’s,” Chamberlain resident Michelle Barth said after shopping at the store Friday morning. “It was nice to have other options. It’s just going to be another empty building.”

With JCPenney vacating the premises, so goes a large tenant in the 52-year-old Palace Mall. Once anchored of Shopko, a grocery store and JCPenney, the mall is approximately half-empty, according to owner Equity Investment Group’s website. Equity Investment Group did not immediately respond to a request Friday for comment from The Daily Republic, but its website said JCPenney occupied the largest space in the mall at 23,500 square feet, or 18 percent of the leasable space.

Equity Investment Group also lists JCPenney as one of its “Anchor Tenants,” and with the store leaving, its website said the mall now has 14 vacancies out of 26 leasable areas.

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JCPenney could leave the mall this summer, as the corporate press release notes most closures will occur in June. Most affected stores, including other South Dakota locations in Pierre, Watertown and Yankton, will begin the liquidation process April 17.

Officials at the Mitchell store declined comment Friday. Roughly 5,000 jobs will be affected by the closures, including approximately 25 Mitchell positions, according to Penney’s corporate communications staff. Employees impacted by the closures will receive separation benefits, including help finding other employment opportunities.

The total store closures represent approximately 14 percent of the company’s store portfolio and less than 5 percent of total annual sales.

The stores slated for closure either require “significant capital to achieve the company’s new brand standard or are minimally cash flow positive today relative to the company’s overall consolidated average,” according to a February press release from JCPenney.

Inside the store, sentiments were passed between customers and employees, expressing sadness and sympathy for the employees will likely lose their jobs.

For Barth, hindsight is 20/20.

“We get to Mitchell maybe once or twice a month but it’s not like we come (to JCPenney) every time,” Barth said. “Maybe we should have been coming more often.”

But a few more trips to Mitchell might not have saved the town’s JCPenney from folding.

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Mitchell Area Development Corporation Executive Director Bryan Hisel said it’s disappointing a company with a long retail history is closing 138 stores nationwide, noting the closure has less to do with the Mitchell community and more to do with the changing retail environment.

“So this is a retailer that wasn’t able to change to the new retail environment, which is the digital world, the web, the online purchases,” Hisel said. “And so it’s really a national story about a retailer that lost it’s position in the marketplace and less about the strength of Mitchell retailing.”

Hisel said Mitchell remains one of the top five or six retailing communities in South Dakota even after Kmart closed its doors last spring, but much of north Mitchell has transitioned into a home for professional office space rather than retail options. And while the remaining retailers one the north side of town - Vern Eide Ford, Coborn’s and Shopko - are positioned well, Hisel said the Palace Mall could join the growing trend of more business office space north of the railroad tracks.

“And the mall itself has converted to other options,” Hisel said. “I’m not saying that it’s all going to be different, but the North Main area is now an office environment.”

He pointed to the new BankWest building and other additions throughout the years, including offices for Morgan Theeler, Dice Financial and a handful of new dentistry practices, and similar types of office space could be in the Palace Mall’s future.

Hisel said Navigant Cymetrix - a health care consulting, billing and coding company - has already expanded operations in the mall, and the changing retail landscape could bring similar businesses to the Palace Mall.

Regarding a retail store like JCPenney, Hisel said there’s not much locals can do to keep the company in town. And following JCPenney’s announcement, he said the city should think of the people impacted.

“There’s nothing we can do to stop major corporations from making decisions that impact their positions in our community,” Hisel said. “There is, however, a lot we can do to help reposition the north side.”

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