Ice cream, HVAC and pickleball: what Minnesota towns are doing with their old Shopko spaces

A few years ago, Tiffany Jennen was looking for a large commercial space to lease in order to open a new gymnastics facility in Fergus Falls.

She found one in a building that had previously been a Shopko home goods store. Shopko filed for bankruptcy in 2019. Its parent company cited piling up debt and a decline in brick-and-mortar retail sales. It subsequently closed all its remaining stores, including 22 in Minnesota, leaving Fergus Falls and many other small and mid-sized Minnesota cities with big, empty stores.

The closings of Shopko and other large-footprint stores like Kmart, Herberger’s and Younkers stores in recent years as shopping has increasingly moved online have presented some unique challenges for Minnesota cities.

“The building is larger than most tenants are looking for,” a Worthington official told MinnPost of the city’s empty Shopko building in 2019. “It just seems like the whole industry is finding it tougher and tougher. Commercial brokers are having a tough time leasing out buildings of that size.”

A couple years later, many of the sites that formerly housed Shopko stores are now home to different businesses — restaurants, factories, self-storage and more – that reflect the changing needs of Minnesota communities.

A changing retail landscape

In recent years, big box stores have been hit hard by changing economic conditions. Consumers no longer need to shop in town for a new television, clothing or pots and pans. Buyers — even in some of the most remote corners of Minnesota — have the same access to Amazon and other online retailers that people in bigger cities have. The nearest Target may be 100 miles away, but Target.com is accessible from anywhere.

Big box store closures affect urban, suburban and rural areas alike. But the closures tend to be more visible in smaller communities, where they can affect morale, said Ryan Pesch, an extension educator at the University of Minnesota who focuses on community economic development.

“It’s not personal,” Pesch said — these decisions are made in faraway corporate suites — but it can feel personal.

“One of the big challenges is that it’s cumulative,” Pesch said. “It’s Shopko one day, but it’s Kmart the week before and Herberger’s the week before that.”

The loss of stores, particularly in succession, can make people feel like a place is losing momentum.

“They’re victims of things out of their control, changes in industry and such. That’s out of their control and that does have an impact on how people think and feel about their community,” he said.

Cities find success

Now, many of Minnesota’s former big box stores are now occupied by local businesses as diverse as the towns they’re located in.

In Aitkin, northeast of Brainerd, the former Shopko site was purchased last year by the owners of Brainerd company Huff Entertainment, said Mark Jeffers, Aitkin County economic development coordinator.

The new owners are planning to convert the space into an event complex that will cater to both locals and tourists, hosting weddings, concerts and other events as well as making space available parts of the week for community center-type activities, potentially pickleball and the like, Jeffers said.

In Kasson, Minnesota, west of Rochester, the former Shopko was sold in 2020 to developers and now houses multiple businesses, including an ice cream shop and self-storage.

The Shopko in North Rochester is now home to several businesses, including the Purple Goat Kitchen and Bar and a heating and air company.

In Perham, in Otter Tail County, a local hardware store owner bought the former Shopko and expanded his business to include a Shopko-like home goods store.

As of June, East Grand Forks’ former Shopko site was slated to become a furniture store.

The former Shopko in Mahnomen was bought by the White Earth tribe. It’s currently being used for storage but may be used for commercial ventures in the future, said Gary Padrta, White Earth public relations coordinator.

And what had been a Shopko store location in Worthington, just off Interstate 90, is being demolished as KwikTrip builds a new gas station.

Fergus Falls

When she planned to open Balance Gymnastics Center in Fergus Falls, Jennen said she had originally been looking at warehouse-type spaces. But there wasn’t much available in the range of the 11,000-or-so square feet she needed.

Initially, the Shopko site, which is on the edge of downtown Fergus Falls and right on the river, was slated to become a mixed-use development with both commercial and residential space, said NeTia Bauman, the CEO of Greater Fergus Falls. The residential plans were postponed, however, with the recent increase in housing construction costs.

The high ceilings in parts of the former store were a big draw to the ex-Shopko site, Jennen said. In gymnastics, the high bar is about 10 feet tall. If a 6-foot tall athlete is doing a handstand on top of it, they could easily hit a low ceiling. Same with someone who is airborne on a dismount from a balance beam.

“Gymnastics facilities need a large space. It makes them hard to house in many buildings, so they’re actually a really good fit for closed big box stores,” Jennen said.

But the site has other benefits to her business, too. It’s located about two blocks from the high school, and serves as the school’s gymnastics practice space.

Bauman said Greater Fergus Falls is happy with the reuse of the Shopko site. Balance Gymnastics Center occupies part of the space, and Vector Windows, a local window manufacturer, is in the other part.

“So the reuse of this site enabled an existing business to expand and an early-stage entrepreneur to bring their business to life,” she said.

Fergus Falls has dealt with more than its share of big box store closures. In recent years, it’s seen a string of them, from Kmart to Sun Mart to Target and Shopko.

“We heard a lot of ‘Fergus is dying’ talk around the community,” Bauman said. “Retail closures of this magnitude have a significant impact on rural communities. There’s tax base, jobs, eventual blight; all serious implications.”

Community leaders decided that while those large-format commercial properties posed significant challenges for redevelopment, the potential benefits of repurposing them were too great not to try, Bauman said.

Today, the former Sun Mart building is being used for manufacturing and could add retail tenants. The Target site is owned by the school district and is now a childhood education center. A former automotive store is being redeveloped as a dental clinic.

The whole experience is illustrative of how retail is cyclical, Bauman said. In the ’70s, Fergus Falls’ downtown was full of mom-and-pop shops. Then came the era of big box stores and malls, when downtown had many more vacant storefronts.

“Today, they’re back downtown,” Bauman said of local businesses. She encouraged development officials in other cities trying to find new uses for former big box stores to think about how local investors can be brought in, rather than spending lots of time and money to recruit investors from outside the community.

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Based on her experience turning a former Shopko into a gymnastics center, Jennen urged people to be imaginative about what can be done with empty former retail space.

“Replacing ceiling tiles, paint and carpet cleaning made a world of difference,” she said. “A little elbow grease can really go a long way.”