MANKATO — Dozens of Lowe's stores are closing, including the Mankato location.
Twenty “underperforming” stores in the U.S. and 31 stores and plants in Canada are closing, the company announced Monday. Mankato is the only location to be shuttered in Minnesota.
Most stores are expected to close by the end of January. A few stores are closing their doors immediately. Mankato is not among the immediate closures, according to store employees.
Liquidation sales will begin Thursday, according to the Lowe's website.
The Mankato store, at 2015 Bassett Drive near Kohl's, opened in 2007. The 140,000-square-foot building on a 13-acre site is owned by Lowe's and has a market value of $5.8 million, according to county property records.
A call to the Mankato store was referred to the corporate public relations office. The closures are part of an “ongoing strategic reassessment” to “focus on its most profitable stores,” a news release states.
Most employees will be offered jobs at other locations, according to the news release. The nearest store to Mankato will be in Owatonna.
“While decisions that impact our associates are never easy, the store closures are a necessary step in our strategic reassessment as we focus on building a stronger business,” Marvin Ellison, Lowe’s president and CEO, said in a statement.
Commercial real estate developers in Mankato say robust competition in the home improvement business and national trends of online buying may have been the final blow for the Mankato Lowe’s store.
Tim Lidstrom, owner of Lidstrom Commercial Realtors, sold the land to all four of Mankato’s home improvement stores.
The closing of Lowe’s was sad to see, he said. “It feels like losing one of the family.”
Lidstrom noted Home Depot and Menards made the competition stiff, and the opening of a large Fleet Farm store made things even tougher.
John Kietzer, a commercial broker with Century 21 Landmark Realtors, echoed those sentiments. Fleet Farm built a large 183,000-square-foot store that opened in March 2015.
“They (Lowe’s) probably suffered quite a bit after that happened,” Kietzer said.
The size of the Mankato market may not have been big enough for all four big home improvement retailers, said Dave Schooff, president of Coldwell Banker Fisher Commercial Group.
“For our market size, you need quite a bit of sales. Having a building that big is expensive,” he said.
Mankato retail trade in the home improvement category has actually declined by about 2.5 percent from 2011 to 2016, dropping from $106 million to $103 million, according to the most recent figures from the state.
Adding a retailer like Fleet Farm split up the piece of the pie even more.
Schooff notes Menards also opened a New Ulm store that may have drawn down some Mankato business when it opened in March 2013.
Schooff also said the Lowe’s choice of location in Mankato may have been a contributing factor. He said he believed there were better sites in town at the time Lowe’s opened and the place the company chose seemed isolated.
“I was surprised at the site. At the time, there wasn’t a lot out there,” Schooff said.
But Lidstrom, who worked to sell Lowe’s the site, said he didn’t see the location as a problem, pointing out that nearby Kohl’s seems to be doing fine.
Kietzer suggested margins could be small for a store like Lowe’s — in the 5 to 10 percent range — and that would make it tough to hang on in a competitive environment locally and with the move to online shopping.
But local costs of doing business also might be a factor. Large retailers from the Twin Cities tell him the property taxes in the Mankato area are among the highest they see in the nation. Kietzer also hears from them that some Twin Cities locations have lower property taxes. “I hear that relatively often.”
While Mankato’s market is growing in population, the household incomes are not as strong and that is another factor big retailers consider.
“We just need more of those high-paying jobs,” Kietzer said.
But he also sees the Mankato retail scene as “soft” with the recent closings of Gordmans, Gander Mountain, Sears and Herberger’s.
John Considine, Greater Mankato Growth director of regional business intelligence, said Mankato remains attractive for retail.
“Greater Mankato continues to be a destination in southern Minnesota for retail. However, national trends in online purchasing continue to impact the marketplace," Considine said in a statement. "Finding a replacement tenant for large retailers can be a lengthy process. A future tenant may benefit from the new development on the horizon adjacent to the Lowe’s property,” Considine said, referencing new a housing development and a commercial area being built behind Kohl’s and along Highway 22.
In the end, Lowe’s may have been a victim of a larger retail trend.
“The big-box world is not what it was 10 years ago,” Schooff said.