Walmart pushes on Target’s turf

Published 9:37 am Monday, October 22, 2012

ST. PAUL — Target Corp. may be headquartered in Minneapolis, but that’s not stopping Wal-Mart Stores Inc. from making an aggressive push in its rival’s home state.

Three Walmart SuperCenters are slated to open this week in Burnsville, St. Cloud and Redwood Falls, bringing the retail chain’s total number of Minnesota stores to 57. When that happens, Minnesota will have more Walmart outlets, including Sam’s Clubs, than it does Target stores.

And the Bentonville, Ark.-based company isn’t done. It has begun preliminary work on three more Walmart SuperCenters in Plymouth, Chanhassen and Andover, according to a St. Paul Pioneer Press report.

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“Their whole strategy has always been to go into a market and dominate it,” said Stan Pohmer, a Twin Cities retail analyst.

Most of Walmart’s expansion in Minnesota has been through SuperCenters, which feature full grocery stores in addition to the electronics and other items Walmart stores have traditionally carried.

Walmart currently is the third largest grocer in the Twin Cities behind Cub Foods and Target.

Cub, owned by Eden Prairie-based Supervalu, and Target have long been strong in the Twin Cities, perhaps one reason Walmart avoided more of a push earlier.

Walmart built up its presence slowly, starting in the outstate areas of Minnesota and gradually moving closer to larger population hubs.

Now the battle has come to Target’s and Cub’s home turf, and analysts expect some fallout.

“What you generally see is, the weaker players will back out,” Pohmer said. “In situations like this, you generally see some of the independent grocery stores … they might sell out. It will foster consolidation.”

Bernie Hesse, a union organizer with the United Food and Commercial Workers, worries about the impact of Walmart’s expansion. The group has pushed back against the company’s growth, most recently in Cottage Grove.

“They keep talking about jobs, and we hope to have a good discussion in that community about job quality,” Hesse said.

Some citizens also have pushed back, worried that mom-and-pop stores will suffer and arguing that customers should support Minnesota companies instead.

Yet Walmart often wins these debates because it promises what communities crave: jobs, construction and tax revenues. Plus, it says consumers benefit from the competition — an argument that some analysts agree with.

“You do see more aggressive pricing,” Pohmer said. “Bottom line, I think the consumer wins. You’ve got more stores, all of them playing closer to their A game, and the consumer has more choices and gets a better deal.”

All five Walmarts opening this fall in Minnesota are SuperCenters, company spokeswoman Delia Garcia said.

“So when you look at those five stores, you’re creating approximately 1,100 new jobs in Minnesota this year,” Garcia said.

Despite Walmart’s growth, the Twin Cities region has long been Target territory. Target’s hometown remains its strongest market.

The discounter opened one SuperTarget store this year in Inver Grove Heights, in the metro Twin Cities.

“Overall, Target continues to be selective when choosing new store locations,” Target spokeswoman Erika Winkels said. “… We are committed to the communities in which we do business.”

Analysts expect Target to fight hard to keep a market-leading position.

“Target has worked hard to build that loyalty, the loyalty and trust,” Pohmer said. “Even in today’s marketplace with a changed consumer, loyalty counts a lot. If one believes Target is not going to react in some way, shape or form to the Walmart growth, I think someone is sadly mistaken.”