Target Corp. said Tuesday that it will, for the first time, sell wine and spirits at a Minnesota location, 18 years after the Minneapolis-based retailer began alcohol sales in other states.
The move comes as the retailer faces increasing competition from other big-box stores, grocers and discounters, many of which already sell wine, beer and alcohol.
Later this summer, the Otsego SuperTarget will open a liquor store adjacent to its main location as part of a pilot program Target is launching in Minnesota. While Target wouldn’t say whether it hopes to expand the program elsewhere in the state, the experiment could signal the retailer’s intent to move into the broader market fight for liquor sales.
That could prove a worrisome development for many of Minnesota’s small businesses that sell liquor, which could face a powerful new competitor and one that in some cases is located close by their own stores.
The Otsego City Council gave the green light Monday for Target’s liquor store license. The retailer also submitted plans to add “Wine and Spirits” signage to the seven-year-old store.
“It’s an important part of Target’s ongoing efforts to deliver a convenient, one-stop shopping experience for our guests,” spokeswoman Erica Julkowski said in a statement.
The retailer has been selling wine, beer and spirits since 1996 and offers them in 1,300 of its 1,800 locations nationwide. Minnesota is one of the last states where Target doesn’t sell alcohol, mainly because of stringent restrictions that require separate entrances for alcohol sales, no transactions after 2 a.m., and no sales on Sundays.
“They waited as long as they could, but with the pressure on revenue and profit, they had to change,” said Dave Brennan, co-director of the University of St. Thomas Institute for Retailing Excellence.
Other retailers, including Cub Foods, Rainbow, Lunds and Wal-Mart — already sell liquor in Minnesota.
While Target is only committing to one location for now, experts say there’s a good chance that Target will expand to its other 70-plus stores throughout the state.
“Society is begging for the convenience,” said Frank Ball, executive director of the Minnesota Licensed Beverage Association.
The Otsego SuperTarget was likely considered for the pilot program because of its larger format but also because a liquor store can be added with limited remodeling. “The store already has office space with its own entrance that can be converted without much effort,” Otsego Mayor Jessica Stockamp said.
According to a rendering, signage will be off to the side of the main Target entrance but still blend in well with the store’s overall facade. Napa Valley Liquors has a location just a few doors down in the same shopping complex. Owners there couldn’t be reached Tuesday for comment.
Target is typically methodical in rolling out new initiatives. For instance, it is testing its small-format Target Express only in Dinkytown. The company’s smaller, urban format has been introduced in a handful of cities.
Making liquor stores available across Minnesota will require millions in investment from Target, given the state law requiring separate entrances and other complications, experts say.
Minneapolis resident Lisa Braaten thinks the change is long overdue.
“It will be one less stop for me when I’m shopping,’’ she said. “Minnesota’s laws about separate entrances and no Sunday sales are too strict.”
Still, Target is no stranger to the liquor market and has even put its own brand in its liquor stores. Its popular wine Cube boxes have different packaging colors for each wine variety. Analysts describe the addition of alcohol as a logical extension to PFresh, Target’s grocery format that has grown even as demand for electronics and other items have declined. Just as PFresh attracts repeat business when shoppers run out of staples such as milk and bread, so will wine and beer, they said.
Target already sells liquor in 37 states including Wisconsin, mostly through its SuperTarget stores.