Showing posts with label Target. Show all posts
Showing posts with label Target. Show all posts

Wednesday, May 2, 2012

May 1, 1962 - The First Target Opens


Once again, another legendary retailer celebrates their golden anniversary. It’s none other than Target, “the upscale discounter”, which officially launched 50 years ago today yesterday. Pictured above is the very first Target store, located in Roseville, Minnesota, a suburb just north of the Twin Cities. From this humble beginning came one of today’s most successful and influential retailers, and one of the world’s most iconic brands.   
As mentioned ad nauseam on this site and in many other quarters, Target’s founding year, 1962, was the year of the discount store revolution. Walmart and Kmart, the industry’s other two key players, were also founded that year, as were a number of others, including Woolworth’s long-departed Woolco division and Big K, a southeastern chain that was eventually acquired by Walmart.
These chains and their coincidental founding year were all mentioned in our previous observance of Kmart's 50th a couple of months back,  but no sooner were the pixels dry on that post (Don’t you just hate expressions like that?) than I recalled some others that trace their origin to 1962 – Shopko, a Green Bay Wisconsin-based chain, still exists. Sky City, based in Asheville, North Carolina with locations throughout the Southeast, unfortunately no longer does. I’ll probably think of some more within minutes after posting this.
Target differs in a fundamental way from Walmart and Kmart, its two key competitors over the last 30 years or so (and for the foreseeable future), and this difference can be traced back to the companies’ roots. “Kmart was founded by a dime store company (S.S.Kresge) and Wal-Mart was a variety store company (Sam Walton’s Ben Franklin franchises),” said former Target executive Norm McMillan to Laura Rowley, author of On Target, an entertainingly written history of the company, while “The background of the Target enterprise was the department store business – so that influenced our strategic planning and the way stores were run.”
Indeed, The Dayton Company, founded in Minneapolis in 1902, had long been considered one of America’s best run department store firms. So well run, in fact, that they found themselves having to fend off a good deal of flak from their prestigious department store cohorts about their decision to go slumming in the discount world. Rowley quotes Target president Douglas Dayton in a 1966 speech to the Associated Merchandising Corporation: “I start with the assumption that all of you …wish that discount stores had never been invented, and I have no quarrel with that wish. It is a perfectly natural one. The catch is that it doesn’t seem to have impaired discount stores’ progress one iota…To some I may be laboring the point; to others - and I have to be perfectly frank - you have underestimated what is going on.” (This would have made a nice extra verse for Dylan’s “The Times They Are a-Changin'”, don’t you think? Just need to come up with a good quadruple rhyme.) A major change in consumer buying patterns was afoot, and Dayton bravely chose to jump into the fray.
Generally conservative, the Dayton Company could nonetheless claim a pretty bold move in their recent history. In 1954, they developed the nation’s first enclosed mall, Southdale Shopping Center, in Edina, a southwest suburb of Minneapolis. Dayton took the then-unusual step of inviting a key department store rival, Donaldson’s, to join the project. They engaged Victor Gruen, an Austrian-born architect with visions of the mall as a ‘civilizing force for the sprawling suburbs’, to design the center. Southdale jump-started Gruen’s career as an architect of unparalleled influence over the ensuing decade. For Dayton, it proved to be a financial winner and an anchor for their suburban “branch store” strategy.
In one sense, however, the concept of the discount store was really just an update of a time-honored department store tradition – the “basement store”, usually a basement or sub-level of a downtown flagship store reserved for bargain and closeout merchandise. Dayton’s had one in their Nicollet Avenue home base, as did many well-known department store operators across the country. While bargain hunting has been a great American pursuit for eons, in decades past there was often a certain stigma (unfairly) conferred upon those who consistently shopped “downstairs”, whether out of need or preference, instead of on the main floor. The discount stores, having no “upstairs” per se, erased this stigma, and their suburban locations put them closer to the fastest-growing base of customers. 
After some months of fact-finding “undercover missions” to discount store chains across the country by Dayton managers (Topps in Chicago, on a growth tear at the time, was one they particularly liked), the first Target store opened on May 1 in Roseville. It was a 68,000 square foot store with a surprisingly large grocery department -25,000 sq. ft., leased out to Applebaum’s Food Market of St. Paul. (Somewhere I remember seeing a photo of a very cool-looking ice cream carton with the original Target “bullseye” logo on it. Hopefully I’ll come across it again one of these days.)  
According to Rowley, the general merchandise mix was 65 percent hardlines (“auto supplies and appliances”) and 35 percent softlines (“clothing and accessories”).  Roseville was the first of four units launched that year – three in the greater Twin Cities area (Crystal and Knollwood/St. Louis Park being the others) and one a bit further north in Duluth. This 1965 photo of the Duluth store shows just how quickly the chain’s architectural style evolved from the very modest design of the first Target.  
Throughout the balance of the 1960’s, growth was “steady and methodical” when compared to Kmart at least, who were burning up the countryside with some 35 new stores a year at the time.  Three years passed before the opening of the next Target in Bloomington, Minnesota in 1965. The next year, 1966, saw Target’s first expansion market, Denver (Glendale and Westland Centers), followed by two more on the home turf, Fridley and West St. Paul, Minnesota in 1967. In 1968, Target expanded into St. Louis with North and South County stores. A third store was added in Bridgeton the next year. The close of the decade saw Target stores in Dallas (North Dallas and Garland, with a Village Fair location added in 1970) and Houston (Hedwig Village and South Loop, with Sharpstown added in 1970), along with a unit in Colorado Springs. 
One probable reason for the measured approach was the simple fact that Dayton had a lot of things on their plate in the late 60’s, putting it mildly. In 1969, Dayton bought out the Detroit-based J.L. Hudson Company, “the nation’s largest independently owned department store operation”, as their 1968 annual report put it. Now called Dayton-Hudson Corporation, and with more than double the department store operations as before, the acquisitions didn’t stop there. That same year they picked up Lechmere, a Boston-based electronic and appliance retailer, whose operations were lumped in with Target’s as part of D-H’s “Low-Margin Division.”  These moves coincided with a major expansion of Dayton’s bookstore operations, which were launched in 1966. Bruce Dayton, the company president, decided to name the company’s bookstores after himself, substituting one letter in the last name, of course – “B. Dalton Booksellers”, a mainstay of shopping malls for decades.    
Whether or not it was a deliberate part of the strategy, there was certainly an added benefit to the slower rollout of the Target stores. It enabled Dayton-Hudson to hone Target’s upscale image – the key differentiator that led to the furious post 1980-growth and high repute the company enjoys today - over time. Their faux French nickname, “Tar-zhay”, surfaced almost right off the bat, according to Douglas Dayton, Target’s original division president, who told author Laura Rowley he first heard customers using the word at the Duluth store way back in 1962. For a time, they even used “Miss Target” (actually pronounced “Miss Tar-zhay”!) for their private label line of women’s shoes.  
Eventually a stronger graphic image was needed, and for that Target reached out to Unimark International, the legendary Chicago-based design firm responsible for some of the most enduring corporate identities in business history, including those of American Airlines and Ford Motor Company. (And one that many of us wish had endured - the 1971-2011 JCPenney logo.) It’s hard to overstate Unimark’s effect on the world of corporate design, especially in the late 60’s and early 70’s, when the world seemed to change overnight from a graphical stone soup to solid-color backgrounds and Helvetica.  
In 1969, the new logo was introduced -a single, thicker ring around the bullseye replaced the double-ringed earlier versions, and Helvetica supplanted the multiplicity of fonts Target previously used. Another very significant Unimark contribution was the widespread use of the color red, which all these years later, Target virtually “owns” from a retail standpoint.  
Gotta love those red plastic shopping carts, right? And the “Target Lady”. And those retro products (like cereals and detergent) they keep featuring. Here’s to another 50 years!   
The photo above is from the fascinating book UNIMARK INTERNATIONAL – The Design of Business and the Business of Design by Jan Conradi and appears here through the courtesy of Kevin Rau, the book’s designer and archivist of the stunning collection of artifacts that illustrate the book. This book is essential for design fans and is an incredible business history as well. Forget Mad Men, this was the real thing! (Ok, don’t forget Mad Men. Sorry for even bringing that up.) Kevin has his own design firm, Rauhaus, based in Oshkosh, Wisconsin, where he specializes in corporate identity, publication design and wonderful printed work using classic letterpress technology.
Thanks also to Michael Doty for the tip on the great circa-1970 Target commercials below. Note the combination of the new Target logo with some of the “hodgepodge” mentioned above. Fun stuff!

Sunday, July 20, 2008

Influencing Wal-Mart

The one aspect of the Wal-Mart story that I find most fascinating was Sam Walton’s study of the discount store industry, in the years both before and after the launch of his namesake chain. In his autobiography, Walton describes his adventures visiting discount stores all over America. “I ran the country, studying the discounting concept, visiting every store and company headquarters I could find”, he wrote. Starting in the New England area, which was in many ways the birthplace of the concept , Walton worked his way from coast to coast.

Most often, due to Walton’s humble, disarming approach (“Hi, I’m Sam Walton from Bentonville, Arkansas. We’ve got a few stores out there, and I’d like to visit with Mr. So-and-So” – whoever the head of the company was- “about his business”)and the lack of any perceived competitive threat (which of course was the case at the time), discount chain presidents everywhere were all too happy to escort Sam on a tour, showing off their empires. It was a chance to impress a small-time operator from the sticks.

Walton accurately describes the make-up of the industry at the time as largely composed of “promoter” types – wholesalers or real estate promoters with little interest in the merchandising business who saw an opportunity to strike it rich. “They would take a carbon copy of somebody’s store in Connecticut or Boston, hire some buyers and some supervisors who were supposed to know the business, and start opening up stores. From about 1958 to 1970, it was phenomenally successful”.

The frugal Walton took note of the lifestyles of the discount chiefs, many of whom lived like Roman emperors – private jets, Cadillacs, cadres of servants and so on, living off the "discounting fad" while ignoring the condition of their stores and the quality and attitude of their customer service. Many of them just became lazy, unaware while their businesses slowly deteriorated. By the beginning of the 1990’s, as Walton pointed out referencing a then recent trade magazine article, 76 of the top 100 American discount stores that were in business in 1976 no longer existed. Of course, in the 16 years since Walton’s passing, the remaining count of 24 has been severely pared down as well.

Aside from these “good examples of bad examples”, as Sam might have put it, there were some individuals for whom he developed great respect - John Geisse, who played a key role in the founding of Target and Venture was one, but at the top of Walton’s list were Harry Cunningham, former S.S. Kresge president and father of Kmart, and Sol Price, the founder of Fed-Mart and Price Club.

It’s highly likely that had Kmart not existed, Wal-Mart couldn’t have. Walton, an ardent admirer of the (early, at least) Kmart merchandising style, considered Kmart his “laboratory” and claimed to have visited more Kmart stores than anyone, even while on vacation, as his wife Helen, as quoted in Robert Slater’s The Wal-Mart Triumph attested: “Sam never went by a Kmart that he didn’t stop by and look at it”. In time, Walton gained Cunningham’s respect as well. Long after his 1972 retirement from Kresge, in what certainly ends up sounding like a backhanded slap at his old company, Cunningham was quoted in Sam’s 1992 autobiography – “From the time anybody first noticed Sam, it was obvious he had adopted all of the original Kmart ideas. I always had great admiration for the way he implemented – and later enlarged on – those ideas. Much later on, when I was retired but still a Kmart board member, I tried to advise the company’s management of just what a serious threat I thought he was. But it wasn’t until fairly recently that they took him seriously”.

Sol Price, one of the best known early proponents of the “warehouse store” concept, was a huge influence on Walton in a couple of key areas. Price, still kicking at age 92, founded Fed-Mart in 1954 as a membership warehouse store in San Diego. Eventually, Fed-Mart would grow to a 45-store chain with locations in California, Arizona and Texas. Price sold the chain to a German firm in 1975 and with his son Robert founded The Price Company, another warehouse store operation whose stores went under the name of Price Club, the following year. In 1993, he would merge his company with Costco.

For starters, Sam liked the sound of the name “Fed-Mart”, a fact often cited among the stories about the origin of the Wal-Mart name. To be sure, however, Price’s most notable influence on Walton was in regard to the warehouse store concept itself. In 1983, some months following a dinner with Price and their wives in San Diego, Wal-Mart launched its first Sam’s Wholesale Club in Oklahoma City. Despite this new competitive relationship, the two men maintained a warm personal friendship, as evidenced (and possibly tested) by a story Walton related in his book. Sam, on one of his competitive store visits, browsed the Price Club store on Morena Avenue in San Diego, tape recorder in hand, noting prices and other details about the store. Stopped by a security guard who demanded the tape, Walton obliged, asking to write a note to Robert Price about the tape, which also contained observations from other area stores. A few days later, Walton received the tape in the mail, none of it erased, accompanied by a friendly note from Price. Now, that's a friend!

The photos above are circa 1972.

Wednesday, May 14, 2008

Kmart - Big Changes for the Bluelight

Having enjoyed a golden decade from the mid-sixties through the mid-seventies, from that point on things would become complicated for Kmart. Part of this was due to external factors such as competition and general economic ups and downs, but a series of management decisions made along the way certainly played a major factor as well.

While Kmart was an early pioneer in automated distribution, they were slow to adopt computer technology for inventory control and ordering, ostensibly to maintain a high level of independence for store managers, but it proved very costly in terms of efficiency. A much larger factor, from the public’s point of view, was the appearance of the stores. While looking at these photos tends to make me (and many of you, as I’ve learned) very nostalgic for those days, one would have to admit that by the time the 1980’s rolled around, the look had become extremely dated. Over time, the public perception of the company unfortunately (and in many respects undeservedly) shifted from a source of “value-priced” goods to one of cheap goods.

As the eighties rolled on, the company found itself fighting a two-front war, on one side against Wal-Mart, which by that time had grown well beyond the Mid-South region, becoming a true national competitor. Wal-Mart, with highly sophisticated information systems and very aggressive supplier policies became extremely formidable in price competition. On the other flank, Dayton-Hudson’s Target stores had expanded far outside of their original Midwestern footprint, in part through the acquisition of such regional chains as Richway, its sister nameplate Gold Circle and a large number of Gemco units from Lucky Stores. Pursuing a strategy that emphasized affordable style, Target signed up designer Michael Graves, among others, to develop chic housewares for those on a budget. Kmart was now in the unenviable position of having to compete with Target on style and Wal-Mart on price.

In 1987, Kmart took a final step in cutting ties to its origins by selling all but 11 of the remaining Kresge and Jupiter stores to Rapid-American Corporation’s McCrory Stores division. By the 1980’s Rapid-American was a key caretaker of America’s 5-and-10 store heritage, owning McCrory, H.L. Green, J.J. Newberry, T G & Y, and McLellan’s. Their only competitors in that fading segment were Woolworth’s and Ben Franklin. Ironically, S.S. Kresge had gotten his start in the business in 1897 as joint owner of a dime store in Memphis, Tennessee with J.G. McCrory. The pair would later open a Detroit store (where Kresge would establish his namesake company) and a handful of others before going their separate ways, starting variety store dynasties under their own names.

In a mid-eighties bid to shore up their fortunes, Kmart embarked on a spree of diversified retail acquisitions that would last into the next decade. The list was extensive. During this period, Kmart bought out, among others, Waldenbooks (and later on Borders Books), the predecessor of what would become Builders Square, The Sports Authority, Pay Less Northwest (a Wilsonville, Oregon-based operator of 164 drug stores in the western states), and OfficeMax, a big-box office supply firm that Kmart acquired a stake in when it sold them a handful of “Office Square” stores (a short lived office supply concept that traded on the Builders Square nameplate). Within a few years, Kmart would buy a controlling interest in OfficeMax. There was also a chain of membership stores called Pace Membership Warehouse. Eventually, Kmart would combine many of these into an entity called the Specialty Store Division. Over the long haul, these acquisitions proved to be little help to the company, and in the mid-90’s Kmart began to sell off or spin off these divisions in a succession nearly as rapid as when it bought them in the first place. A large number of the Pace stores were sold to arch-competitor Wal-Mart for conversion to Sam’s Clubs. In 1998, Kmart would sell off its flagging 112-store Canadian division to Toronto-based Hudson’s Bay Company, who would combine it with its 298-store Zellers division, the leading discount chain in Canada.

In 1990, Kmart took the first step towards changing its image, adopting a new logo for the first time. That year, the company replaced its familiar “Kmart” logo with a red block letter “K” with the word “mart” written in script in the upper leg of the K. In my opinion, the single letter looked a bit lonely up there on the expansive horizontal facades of most Kmart stores. The company must have taken pride in their new logo, as I learned when my wife and I stopped into a Kmart shorted after it was introduced. She had worked at this Kmart one Christmas season before we were married to supplement her teaching income, and we decided to pop in to say hi to the manager, her old boss. He asked our opinion of the new logo, and my wife commented on how it reminded her of the old “Big K” signs. Big K was a chain of mid-south discount stores that Wal-Mart bought out in the early eighties.

He didn’t appreciate the comparison. (Hey, at least we didn’t try to claim credit when years later they added the word “Big” to many of their signs starting in 1996!) Recently, Kmart has adopted a new logo, restoring “mart” to its rightful place.

A more positive effect came about when in 1997 Kmart persuaded domestic diva Martha Stewart to create a comprehensive line of household goods to be exclusively sold at Kmart. Called “Martha Stewart Everyday” this very broad product line included everything from dishes to cookware to linens, towels and bath d├ęcor, and has in many ways been a lifeline for Kmart. There has been rampant speculation as to whether Ms. Stewart will renew her agreement with Kmart when it expires in 2009.

Despite Martha’s best efforts, Kmart skidded inexorably toward bankruptcy as the nineties drew to a close. Incurring a staggering $2.46 billion dollar loss for 2001, Kmart filed for bankruptcy protection on January 22, 2002. Operating 2,114 stores at the time of the filing, massive closings would follow, and a great many people who grew up shopping at Kmart would suddenly find that there was no longer one in or near their communities. The first wave of closings shuttered 284 stores, and sadly more waves were to follow.

A year later, the future of Kmart would be revealed when it was announced that a group of investors, led by 38–year old billionaire Edward S. Lampert, had submitted a plan to usher Kmart out of bankruptcy. Many changes, a degree of stability and a runup in Kmart’s value would follow, and Kmart has lived to fight to this day, although the road remains challenging, to put it mildly. In November 2004, Kmart announced its intentions to buy Sears, Roebuck and Co., a most ironic twist of fate considering the companies’ arch rivalry for America’s retail crown in the 70’s and 80’s. The combined entity was named Sears Holdings Company, and eventually many Kmart executives would relocate from Kmart’s massive 70’s modern headquarters in Troy, Michigan (which is now finally being torn down -many thanks to the reader who sent this link discussing the complex's fate) to Sears (also massive and much newer) HQ in the Chicago suburb of Hoffman Estates. From a consumer’s standpoint, a significant change has been the availability of core Sears brands in Kmart stores, including Die Hard, Kenmore and Craftsman.

The photos above are circa 1976, and show the sign and an interior from the Ionia, Michigan store, a “Group 9” store which was previously operated under another name. The third photo shows the checkouts from a new store in Oxford, Ohio. The fourth is a snack bar shot, location unknown, and the last store pictured is another Group 9 unit from Dyersburg, Tennessee. Thanks to John Flack, who has a great page on the opening of the Marlton, NJ Two Guys store, for photos 2 through 5.

Saturday, December 8, 2007

An Early Target, 1966



The hard Northern winter shows on the faces of these Target shoppers in this 1966 photo. The Target story began in 1962 when the Dayton Company, a venerable 60-year old Minneapolis-based department store chain, decided to capitalize on the discounting trend by setting up its own discount division. At the time, the company had five full line Dayton’s department stores in Minnesota, including their downtown Minneapolis flagship, plus Fantle’s department store in Sioux Falls, South Dakota, which Dayton had bought out in 1954. By 1962, they had also developed some notable shopping center properties, including the well-known Southdale Shopping Center in Edina and the more recent Brookdale Shopping Center in Brooklyn Center, both Twin Cities suburbs.

The early years of Target appear in retrospect to be marked by fairly slow, cautious growth, especially when compared with the chain’s remarkable expansion in the last few decades. Starting with four stores in 1962 – Duluth, Roseville, Crystal and St. Louis Park, they added a fifth Minnesota store in Bloomington in 1965. The first two stores outside of Dayton’s home state were opened in Denver in 1966.

I think it’s safe to say that during those early years (and for some time afterward) Dayton hadn’t the slightest hint that Target would ultimately become the company’s bread and butter, to say nothing of its future profound influence on mass retailing in general. Remarkably, for many years the Target operation would officially be known within Dayton (and later Dayton-Hudson) as the “Low-Margin Division”, I kid you not. Definitely this was an unglamorous name for a chain that would later become synonymous with affordable chic.

Now, of course, the entire company is known as Target Corporation. The Dayton’s stores (and their erstwhile stepsiblings Hudson’s and Marshall Field’s) were sold off to The May Company a few years back, and then to Federated, where the familiar Macy’s logo with its famous red star now reigns on the former D-H stores.

The checkstands in this photo sport the original Target logo. A year later, in 1967, Target would revamp its logo with thicker rings and a filled-in bullseye, creating an enduring retail icon.