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Target Corporation

Target Corporation

1000 Nicollet Mall
Minneapolis, Minnesota 55403-2467
U.S.A.
Telephone: (612) 304-6073
Fax: (612) 696-3731
Web site: http://www.target.com

Public Company
Incorporated: 1902 as Goodfellow Dry Goods
Employees: 306,000
Sales: $43.92 billion (2002)
Stock Exchanges: New York Pacific
Ticker Symbol: TGT
NAIC: 452110 Department Stores; 452910 Warehouse Clubs and Superstores; 452990 All Other General Merchandise Stores; 454110 Electronic Shopping and Mail-Order Houses

Target Corporation is the fourth largest retailer in the United States, operating 1,556 stores in 47 states. Formerly Dayton Hudson Corporation, Target has three main retail divisions: Target Stores, Mervyn's, and Marshall Field's. Target Stores is the number two discount retailer in the country, trailing only Wal-Mart Stores, Inc., and has distinguished itself from its competitors by offering upscale, fashion-conscious products at affordable prices. The 1,225 Target stores, which are located in 47 states, generated 84 percent of Target's fiscal 2002 revenues. Included in this store count are Target Greatland units, which are much larger than the typical Target store, averaging 145,000 square feet versus 126,000 square feet; as well as SuperTarget outlets, which are combined discount/grocery stores, averaging 175,000 square feet. Generating 9 percent of 2002 revenues were Mervyn's 267 stores situated in 14 states, primarily in the West, Southwest, and Midwest (specifically Minnesota and Michigan). Based in the San Francisco Bay area, Mervyn's positions itself as a chain of moderately priced, family friendly, neighborhood department stores. Target Corporation's full-service department store division, contributor of 6 percent of sales, is now consolidated under the Marshall Field's banner. The 62 Marshall Field's stores (which include locations that formerly operated under the Dayton's and J.L. Hudson's names) are located in eight states in the upper Midwest, with the majority found within three metropolitan areas: Minneapolis, Chicago, and Detroit. Target Corporation's philanthropy has been and still is legendary. In 1989 the corporation received the America's Corporate Conscience Award for its magnanimity, and Target contributes more than $2 million each week to the communities in which its stores are located.

Early Years

Target Corporation bears the strong imprint of its founder, George Draper Dayton. Dayton's father, a physician in New York state, could not afford to send him to college, in part because the doctor freely gave his services to the poor. Hence Dayton set off on his own in 1873 at age 16 to work in a coal and lumberyard. A workaholic, he undermined his health and a year later had to return to the family home to recuperate. Undeterred, he went on to become a banker. Less than ten years later, in 1883, he was rich enough to buy the Bank of Worthington in Minnesota. Meanwhile he had married and had become active in the Presbyterian Church.

Dayton's connection with the Presbyterian Church proved to be instrumental to the rise of his Dayton Company. In 1893, the year of a recession that sent local real estate prices tumbling, the Westminster Presbyterian Church in Minneapolis burned down. The insurance did not cover the cost of a new building, and the only other source of income, a corner lot next to the demolished church, was unsalable because the real estate market was doing poorly. The congregation prevailed on the Dayton family, who were faithful members of the church, to purchase it so the building of a new church could proceed. Dayton bought it and eventually erected a six-story building on the lot. Casting about for tenants, he decided to buy the nearby Goodfellow Dry Goods store and set it up in the new building. In the spring of 1902 the store was known as the Goodfellow Dry Goods store; in 1903 the corporate name was changed to Dayton Dry Goods Company, then seven years later simply Dayton Company, the forerunner of Dayton Hudson Corporation and, ultimately, Target Corporation.

Eventually the store would expand to fill the six-story edifice. Dayton, with no previous experience in the retail trade, wielded tight control of the company until his death in 1938. His principles of thrift and sobriety and his connections as a banker enabled the company to grow. As long as he was at the helm, the store was run as a family enterprise. Every Christmas Eve he would hand out candy to each employee of the store. Obsessed with punctuality, he was known to lock the doors at the onset of a meeting, forcing latecomers to wait and apologize to him in person afterwards. The store was run on strict Presbyterian guidelines: no liquor was sold, the store was closed on Sunday, no business travel or advertising was permitted on the Sabbath, and Dayton Company refused to advertise in a newspaper that sponsored liquor ads.

This approach did not stifle business; Dayton Company became extremely successful. A multimillion-dollar business by the 1920s, Dayton Company decided it was ready to expand, purchasing J.B. Hudson & Son, a Minneapolis-based jeweler, in 1929, just two months before the historic stock market crash.

Dayton Company managed to weather the Great Depression, although its jewelry company operated in the red for its duration. Dayton's son David had died in 1923 at age 43, and George turned more and more of the company business over to another son, Nelson. George Draper Dayton died in 1938. He left only a modest personal fortune, having given away millions of dollars to charity. In 1918 the Dayton Foundation had been established with $1 million.

Nelson Dayton took over the presidency of Dayton Company in 1938, when it was already a $14 million business, and saw it grow to a $50 million enterprise. World War II did not hamper business; rather, Dayton's turned the war into an asset. Consumer goods were so scarce that it was no longer necessary to persuade shoppers to buy what merchandise was available. Sales volume increased dramatically thanks to Dayton's managers, who obtained goods to keep the store full. Nelson Dayton was scrupulous about complying with the government's wartime control of business and when, for instance, the government carried out its drive for scrap metal, he ordered the store's electric sign dismantled and added to the scrap heap. Until Nelson Dayton's death in 1950, the company was run along the strict moral lines of his father, its founder. In January 1944 Dayton's became one of the first stores in the nation to offer its workers a retirement policy, followed in 1950 by a comprehensive insurance policy.

Shedding Conservative Image, Launching Target: 1950s60s

With Nelson Dayton's death in 1950, Dayton Company embarked on a new era. Instead of one-man rule, the company was led by a team of five Dayton cousins, although one of them, Nelson's son Donald Dayton, assumed the title of president. The prohibition of liquor in the store's dining rooms was dropped, and soon Dayton Company would be completely secularized, advertising and doing business on Sunday.

The new management of Dayton Company undertook radical and costly innovations. In 1954 the J.L. Hudson Company, which would eventually merge with Dayton's, opened the world's largest shopping mall in suburban Detroit. It was a great success, and two years later Dayton Company decided to build a mall on a 500-acre plot of land outside of Minneapolis. Horrified to learn that Minneapolis had only 113 good shopping days a year, the architect decided to build a mall under cover; Southdale, the first fully enclosed shopping mall in history, was the result, with Dayton's as one of its anchor stores.

The safe, conservative management style favored by George Draper Dayton and his son Nelson passed into history; a younger, more aggressive management pushed for radical expansion and innovation would follow in its wake. The company established the discount chain Target in 1962, opening the first unit in Roseville, Minnesota, and in 1966 decided to enter the highly competitive market of retail bookselling, opening B. Dalton Bookstores.

In 1967 the company changed its name to Dayton Corporation and made its first public stock offering. That year, it also acquired San Francisco's Shreve and Company, which merged with J.B. Hudson to form Dayton Jewelers. In 1968 it bought the Pickwick Book Shops in Los Angeles and merged them with B. Dalton. Also in 1968 the company acquired department stores in Oregon and Arizona. The following year brought the acquisition of J.E. Caldwell, a Philadelphia-based chain of jewelry stores, and Lechmere, a Boston retailer.

Acquiring Hudson's, Mervyn's, and Marshall Field's: 196990

The year 1969 also saw a major acquisition: the Detroitbased J.L. Hudson Company, a department store chain that had been in existence since 1881. The merger resulted in Dayton Hudson Corporation, the 14th largest retailer in the United States. Dayton Hudson stock was listed on the New York Stock Exchange.

With the merger, the Dayton Foundation changed its name to the Dayton Hudson Foundation. Since 1946, 5 percent of Dayton Company's taxable income was donated to the foundation, which continued to be the case after the merger. The foundation inspired the Minneapolis Chamber of Commerce in 1976 to establish the Minneapolis 5% Club, which eventually included 23 companies, each donating 5 percent of their respective taxable incomes to charities. By the close of 1996 the foundation had donated over $352 million to social and artsbased programs.

Dayton Hudson bought two more jewelers in 1970C.D. Peacock, Inc., of Chicago, and J. Jessop and Sons of San Diego. Company revenues surpassed $1 billion in 1971.

California-based Mervyn's, a line of moderate-price department stores, merged with Dayton Hudson in 1978. That year Dayton Hudson became the seventh largest general merchandise retailer in the United States, its revenues by 1979 topping $3 billion. Also in 1979 the Target chain become Dayton Hudson's largest producer of revenue, eclipsing the department stores upon which the firm was founded.

Company Perspectives:

Target Corporation is a growth company focused exclusively on general merchandise retailing. Our principal operating strategy is to provide exceptional value to American consumers through multiple retail formats ranging from upscale discount and moderate-priced to full-service department stores.

Dayton Hudson bought Ayr-Way, an Indianapolis-based chain of 50 discount stores, in 1980, and converted those units to Target stores. In 1982 the company sold Dayton Hudson Jewelers to Henry Birks & Sons Ltd. of Montreal, and in 1986 it sold B. Dalton to Barnes & Noble, Inc. In 1984, meantime, the operations of the company's two full-service department stores were combined into a new unit called the Dayton Hudson Department Store Company, though the Dayton's and Hudson's units themselves retained their separate identities. Revenues topped the $10 billion mark in 1987.

The late 1980s found the company the focus of an unsolicited takeover bid by the Dart Group, which would involve lawsuits by both parties before a stock market crash in October 1987 ended the takeover attempt. A second attempt at takeover of the company would be made nine years later, when rival J.C. Penney Company, Inc. offered more than $6.5 billion for the retailer. The offer, which analysts considered an undervaluation of the company's worth, was rebuffed. Meanwhile, Dayton Hudson continued its acquisitions, purchasing Marshall Field & Company from BATUS Inc., the U.S. subsidiary of B.A.T. Industries PLC, in 1990 for about $1 billion. Venerable Marshall Field's was as much a landmark in the Chicago area as Dayton's was in Minneapolis and the Hudson's stores were in Detroit; the acquisition added 24 department stores to Dayton Hudson's Department Store division while also doubling its department store retail space.

Launching Target Greatland, SuperTargets, and the Target Guest Card: 199095

While the Dayton's, Hudson's, and Marshall Field's department stores offered the monied customer more costly and sophisticated merchandise, the popular Target and Mervyn's catered to the budget-conscious customer, offering apparel and recreational items on a self-service basis. With the approach of the 21st century, Target continued to be Dayton Hudson Corporation's biggest moneymaker, combining a successful business mix of clean, easy-to-navigate stores with quality, trendresponsive merchandise. The year 1990 saw the opening of the first of over 50 expanded Target Greatland stores; in 1995, following the lead of such rivals as Wal-Mart and Kmart, the company opened its first SuperTarget, which combined the chain's successful general merchandise mix with a grocery store. Along with expanding its traditional department stores along the East Coast, six new SuperTargets were planned for 1996 alone. Also introduced in 1995 was the Target Guest Card, the first store credit card in the discount retail industry. By 1998 the Guest Card had attracted nine million accounts.

The proliferation of shopping malls and the recessionary economy of the early 1990s caused sharp changes in consumer spending patterns throughout the United States. By 1996 the country could boast 4.97 billion square feet of retail spacean average of 19 square feet per person nationwidebut retailers felt the pinch caused by such a large number of stores courting increasingly spending-shy consumers. This situation most negatively affected the mid-range and upper-range sales volumes generated by stores on the level of Mervyn's, Dayton's, Marshall Field's, and Hudson's. In response, Dayton Hudson developed new merchandising, customer service, and advertising strategies in an effort to stabilize these units' falling sales volumes. Mervyn's focused greater reliance upon national brands, coupling this with the growing use of print advertising and market expansion through the acquisition of six Jordan Marsh stores and five Lord & Taylor stores in south Florida. Dayton's, Hudson's, and Marshall Field's courted the upscale consumer through an increased mix of unique, quality merchandise, an increased emphasis on customer service, and an increased sales-floor staff, all of which heralded a return to the "old-fashioned service" on which Dayton Hudson was founded. Meanwhile, the Department Store unit worked to reduce inventories and invest in remodeling and technologically enhancing some of its older stores.

Key Dates:

1902:
George Draper Dayton opens the Goodfellow Dry Goods store in a six-story building in downtown Minneapolis.
1903:
Corporate name is changed to Dayton Dry Goods Company.
1910:
Name is shortened to Dayton Company.
1938:
Dayton dies; his son Nelson takes over the $14 million business.
1956:
Company builds the world's first fully enclosed shopping mall, called Southdale, located in suburban Minneapolis.
1962:
The discount Target chain is launched.
1967:
Company changes its name to Dayton Corporation and makes its first public stock offering.
1969:
Dayton merges with the Detroit-based J.L. Hudson Company department store chain, forming Dayton Hudson Corporation.
1978:
Dayton Hudson acquires the California-based Mervyn's chain of moderate-priced department stores.
1979:
The Target chain becomes Dayton Hudson's largest producer of revenue.
1990:
Marshall Field & Company, a Chicago-based department store operator, is acquired.
1995:
The first SuperTarget combined discount/grocery store opens; the Target Guest Card, the first store credit card in the discount retail industry, makes its debut.
1998:
As part of e-commerce push, Rivertown Trading Company, a Twin Cities-based mail-order firm, is acquired.
2000:
Reflecting the increasing importance of its discount chain, Dayton Hudson renames itself Target Corporation; Target Direct is formed as a separate ecommerce unit.
2001:
The names of the Dayton's and Hudson's department stores are changed to Marshall Field's.

Reaching New Heights Under Ulrich: Late 1990s and Beyond

In 1994 Target executive Robert J. Ulrich was named chairman and CEO of Dayton Hudson. In that same year the company began a new strategy: developing a "boundaryless" corporate structure wherein resources and marketing and management expertise could be shared by each of the three divisions to create a more efficient organization. In 1996 Ulrich launched a three-year program to cut $200 million in annual operating expenses, particularly at the underperforming Mervyn's and department store units.

By early 1997 the Dayton Hudson Corporation consisted of three major autonomously run operating units: Target, with 735 discount stores in 38 states, represented the company's primary area of growth; the moderately priced Mervyn's chain operated 300 stores in 16 states, and the upscale Department Store Company operated 22 Hudson's, 19 Dayton's, and 26 Marshall Field's stores. Such broad-based expansion from the first sixstory building in which Dayton was housed no doubt would have stunned the company's founder. Capital expansion, as well as more varied retailing, had taken their place alongside the old policies of thrift and sobriety.

During 1997, as part of its drive to turn around the Mervyn's chain, Dayton Hudson sold off or closed 35 Mervyn's outlets, including all of that chain's stores in Florida and Georgia. The late 1990s also saw a retrenchment on the department store front, as Dayton Hudson sold its Marshall Field's stores in Texas and also closed its Marshall Field's store in downtown Milwaukee.

Dayton Hudson also continued its efforts to give back to the communities that it served. During 1997 the corporation and its retail divisions made grants of approximately $39 million, including $2.8 million in scholarships that were given to high school seniors who had been involved in their communities. That year, the Target chain launched its Take Charge of Education program, which quickly became one of the corporation's most popular community support efforts. The program allowed Target Guest Card holders to sign up the school of their choice to receive 1 percent of their Guest Card purchase amounts. Within two years, more than 300,000 schools were registered and more than $800,000 had been given to these schools.

Ulrich's cost-cutting efforts, the trimming of Mervyn's and Marshall Field's, andmost importantlythe juggernaut that Target had grown into combined to bring unprecedented levels of profitability to Dayton Hudson by the end of the 1990s. While revenues increased to $33.7 billion by fiscal 1999, net income passed the $1 billion mark for the first time, reaching $1.14 billion, translating into a profit margin of 3.4 percent. This represented a near tripling of the 1996 profits of $463 million and a near doubling of the profit margin that year, 1.8 percent. These results were driven primarily by the Target chain, which had become one of the hottest commodities in retailing. Ulrich had concentrated on making Target a hip chain featuring stylish products at bargain prices. For example, in early 1999 the chain began selling top-end Calphalon cookware and also launched a line of stylish small appliances and household goods designed by architect Michael Gravesthe latter line becoming so popular that it quickly grew to include more than 500 items. Through such innovations Ulrich succeeded in clearly setting Target apart from its discount competitorseven leading some customers/fans to use a fancy French pronunciation of the chain's name: Tar-zhay. Meantime, the chain continued to grow at the rate of about 70 stores per year, expanding into the key urban areas of Chicago and New York City, as well as making a more widespread push into the Northeast. As a result, the 900-strong Target chain was generating more than three-quarters of Dayton Hudson's revenues by decade's end, compared to around half ten years earlier. The growing predominance of the discount chain led the corporation to rename itself Target Corporation in January 2000.

During this same period the corporation quietly developed an e-commerce strategy that involved managing its own online distribution. It bought Rivertown Trading Company, a Twin Cities-based mail-order firm, in 1998 for $120 million to handle fulfillment, marketing, and distribution services for the e-commerce efforts of all the corporation's retail units. Online retailing gained a larger profile in early 2000 with the formation of a separate e-commerce unit called Target Direct. New store brand web sites were launched later that year.

The Internet push also played a role in more name changes. In January 2001 the corporation announced that it would change the names of its Dayton's and Hudson's department stores to Marshall Field's. Target was planning to launch an online gift registry during 2001 and wanted to do so under a unified department store name. Marshall Field's was chosen for several reasons: it was the most widely known of the three names, its base of Chicago was bigger than both Minneapolis and Detroit and was a major travel hub, and it was the largest chain, with 24 stores, compared to 19 Dayton's and 21 Hudson's.

At Target Stores (the official name of the discount division), meantime, use of the Target Guest Card began to plateau as consumers gravitated more to third-party Visa and MasterCard cards, cutting their use of private-label cards. Testing began on a Target Visa card in the fall of 2000, and by early 2003 nearly six million Guest Card accounts had been converted to the new Visa card. The Target chain itself kept expanding in the early 2000s, adding 62 discount stores to the total as well as 32 new SuperTarget stores during fiscal 2002, bringing the overall total to nearly 1,150 and the SuperTarget count to around 100. By this time, the Target Stores division was generating 84 percent of the parent company's revenues. Profits reached $1.65 billion, despite the continuing struggles of the Mervyn's and Marshall Field's divisions, where earnings were on the decline. Rumors continued to swirl about the possible divestment of one or both of these divisions, neither one of which was adding to its store count (Marshall Field's in fact sold its two stores in Columbus, Ohio, in 2003). Ulrich consistently denied such rumors, however, and thus far the stellar success of the Target Stores division had more than made up for the disappointing performance of Target Corporation's other retail units.

Principal Subsidiaries

The Associated Merchandising Corporation; Dayton's Commercial Interiors, Inc.

Principal Divisions

Target Stores; Mervyn's; Marshall Field's; Target Financial Services; target.direct.

Principal Competitors

Wal-Mart Stores, Inc.; Kmart Corporation; J.C. Penney Corporation, Inc.; Sears, Roebuck and Co.; Federated Department Stores, Inc.; The May Department Stores Company; The TJX Companies, Inc.; Kohl's Corporation; Dillard's, Inc.; Nordstrom, Inc.; Saks Incorporated; Ross Stores, Inc.

Further Reading

Apgar, Sally, "Dayton Hudson at Crossroads: CEO Ulrich Still Struggling to Jump-Start Mervyn's Stores," Minneapolis Star-Tribune, July 23, 1995, p. 1A.

Berner, Robert, "Dayton Hudson's Once-Fashionable Stores Tread Water," Wall Street Journal, August 1, 1996, p. B4.

Borden, Mark, "Shoppers Love Target, but Shareholders Are Seeing Red," Fortune, September 18, 2000, pp. 64, 68.

Branch, Shelly, "Hot Target Got Hot," Fortune, May 24, 1999, pp. 16970, 172, 174.

Chakravarty, Subrata N., "Planning for the Upturn," Forbes, December 23, 1991, pp. 48+.

Chandler, Susan, "'Speed Is Life' at Dayton Hudson," Business Week, March 27, 1995, pp. 8485.

, "Under the Gun at Dayton Hudson," Business Week, May 20, 1996, pp. 66+.

Clark, Evan, "Is Target Cooling?: Slow Growth Feared at Hot Discounter," Women's Wear Daily, September 30, 2002, pp. 1+.

Conlin, Michelle, "Mass with Class," Forbes, January 11, 1999, pp. 5051.

Dayton, George Draper, II, Our Story: With Histories of the Dayton, McDonald, and Winchell Families, Wayzata, Minn., 1987.

Facenda, Vanessa L., "Is Target Becoming Too Trendy?," Retail Merchandiser, December 2002, pp. 19+.

Gill, Penny, "Macke Maps Plan for Dayton Hudson," Stores, November 1991, pp. 28+.

Halverson, Richard, "Target Powers Dayton Hudson's Growth," Discount Stores News, June 19, 1995, pp. 21+.

Levy, Melissa, "An Old Firm, a New Name: Target Corp.," Minneapolis Star-Tribune, January 14, 2000, p. 1A.

Moore, Janet, "Dayton Hudson: Wall Street's Darling," Minneapolis Star-Tribune, March 15, 1998, p. 1A.

, "The Store Formerly Known As Dayton's: Dayton's and Hudson's Department Stores to Use Marshall Field's Name," Minneapolis Star-Tribune, January 13, 2001, p. 1A.

Rowley, Laura, On Target: How the World's Hottest Retailer Hit a Bullseye, Hoboken, N.J.: Wiley, 2003.

St. Anthony, Neal, "Behind the Bull's-Eye: Bob Ulrich Transformed Target, but the Chain Still Faces Tough Competition," Minneapolis Star-Tribune, November 30, 2003, p. 1D.

Webber, Oscar, J.L. Hudson: The Man and the Store, New York: Newcomen Society in North America, 1954.

Sina Dubovoj

updates: Pamela L. Shelton,

David E. Salamie

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Target Corporation

Target Corporation

777 Nicollet Mall
Minneapolis, MN 55402
(612) 370-6948
www.targetcorp.com

For years, Wal-Mart Stores, Inc., and Kmart Corporation (see entries) dominated the discount retailing industry, offering low prices on a wide range of goods. Few people considered these companies or their smaller competitors trendy: shoppers came looking for bargains, not style. In recent years, however, Target has emerged as a different kind of discount store. Based in Minneapolis, Minnesota, Target offers goods that are higher in quality than its competitors, and its customers tend to be younger and wealthier than typical discount shoppers. Loyal Target customers even gave the store's name a French pronunciation"Tarjay"reflecting their belief that the store has more class than other stores.

Target was once just a small piece of the much larger Dayton Hudson Corporation, a retailer with roots in the late nineteenth century. In 2000, Dayton Hudson (DH) officials renamed the company, the Target Corporation. By doing so, they acknowledged the importance that discount retailing played in their corporate make-up. In the early twenty-first century, Target Corporation was building more Target stores and expanding into Internet commerce. It also attempted to strengthen its department store division, Marshall Field's.

The Glory Days of the Department Store

Marshall Field's, the last chain to join the former Dayton Hudson Corporation, is the oldest of the retail stores in today's Target Corporation. Massachusetts native Marshall Field settled in Chicago, Illinois, in 1856 and began working as a clerk in a dry-goods store. At the time, these store usually sold cloth, ready-made clothes, and small items. Within a few years, Field was a partner in the company. In 1867, he sold his share in that dry-goods firm to buy an interest in its largest competitor. In 1881, the store was renamed Marshall Field's, and it became Chicago's most prominent retailer.

That same year, J. L. Hudson (1846-1912) of Detroit, Michigan, opened his first store, selling boys' and men's clothing. As his business grew, Hudson added more products and built bigger stores, leading to his showcase Hudson's in downtown Detroit. Like other department stores, Hudson's offered a wide variety of quality merchandise. By the 1920s, Hudson's was the third-largest department store in the United States, behind Macy's of New York and Marshall Field's. Additions to the main store eventually made it the tallest department store in the country.

Target at a Glance

  • Employees: 281,000
  • CEO: Robert j. Ulrich
  • Subsidiaries: Associated Merchandising Corporation; Bullseye Corporation; Capitol Lounge Corporation; Dayton Development Corporation; Dayton's Sioux Falls, Inc.; Eight Street Development Company; Marshall Field Stores, Inc.; Mervyn's, Inc.; Retail Properties, Inc.; Retailers National Bank, N. A.; Target Connect, Inc.; Target Services, Inc.; Target Stores, Inc.
  • Major Competitors: Wal-Mart Stores, Inc.; Kmart Corporation; Sears, Roebuck & Company; May Department Stores; Federated Department Stores; j. C. Penney Company, Inc.; Kohl's Corporation; Dillard's Inc.; Saks, Inc.
  • Notable Stores and Companies: Target; SuperTarget; Marshall Field's; Mervyn's; target.direct; Signals; Wireless; Seasons

In 1902, George Dayton (1857-1938) was the landlord of the Goodfellows dry-goods store in Minneapolis, Minnesota. The next year, the company hit hard times, and Dayton took over the business, renaming it the Dayton Dry Goods Company, then later shortening the name to the Dayton Company. Dayton's, Hudson's, and Marshall Field's were not direct competitors; they were regional stores that dominated their home cities and slowly spread out into the surrounding areas. But the stores did have local competition, and each tried to set high standards for service and merchandise. Each store also tried to offer customers unique touches. In its main store, Hudson's had five restaurants where customers could eat and relax. Marshall Field's was known for its Frango mints, chocolate candies sold nowhere else. In Minnesota, Dayton's stood for high fashion and community service. Starting in 1946, Dayton began donating 5 percent of its annual profits to local charities. This tradition continues today with the Target Corporation.

Timeline

1881:
A Chicago department store owned by Marshall Field is given his name; J. L. Hudson opens his first store in Detroit, Michigan.
1903:
George Draper Dayton takes control of a Minneapolis dry-goods store he renames Dayton's.
1946:
The Dayton Company begins contributing 5 percent of its profits to local organizations.
1954:
Hudson's opens the world's largest shopping center in suburban Detroit.
1956:
Dayton's opens the world's first enclosed shopping malt in suburban Minneapolis.
1962:
Dayton's opens the first Target discount store in Roseville, Minnesota.
1969:
The). L Hudson Company and the Dayton Company merge, forming the Dayton Hudson Corporation.
1978:
Dayton Hudson buys Mervyn's, a California chain.
1990:
Dayton Hudson buys Marshall Field's.
2000:
Reflecting the growth of its discount stores, Dayton Hudson changes its name to Target Corporation.
2001:
Hudson's and Dayton's department stores are renamed Marshall Field's.

From Departments to Discounts

After World War II (1939-45), more Americans began living and working in the suburbs of cities such as Detroit, Chicago, and Minneapolis. Families still made trips to the big department stores, but Dayton's and Hudson's saw that to keep growing, they needed to expand beyond their downtown locations. In 1954, the J. L. Hudson Company built Northland Center, the world's largest shopping center at the time. Located in the Detroit suburb of Southfield, the center featured a Hudson's surrounded by other stores. Two years later, the Dayton Company opened Southdale, a two-story, enclosed suburban shopping mallthe first of its kind in the world.

The Dayton Company helped lead another major change in the retail industry. In 1962, it opened its first Target store in Roseville, Minnesota. Target was the first store to offer national, name-brand items at discount prices. Target, however, did not have this new market to itself for long; the same year, Wal-Mart and Kmart stores also opened. Those two competitors eventually became the leaders of the industry.

Discount stores, usually located in small towns and suburbs, began to challenge the strength of many urban department-store chains. To strengthen their position, the J. L. Hudson Company and the Dayton Company merged in 1969, forming the Dayton Hudson Corporation. The new company had several dozen department stores, most in Minnesota and Michigan, along with the growing Target chain.

The Hysteria over Hose

In February 1946, Dayton's was the scene of a frenzied moment in shopping history. The store held its first postwar sale on nylon stockings, which had been taken off the market during World War II (1939-45). The U.S. government needed the strong, stretchy material to make parachutes and other military supplies. At the Dayton's nylon sale, thirteen thousand shoppers jammed the streets of Minneapolis waiting for the store to open. They bought sixty thousand pairs of nylons in just one day.

Boom Years

During the 1970s and 1980s, DH grew dramatically. The company bought several other retailers, including Mervyn's, a California chain, B. Dalton Bookseller, and Lechmere, a regional chain based in the Northeast. DH chief executive officer (CEO) William Andres led the buying binge. The expansion continued when Kenneth A. Macke took control of the company in 1983. By then, company sales had passed $5 billion, and Target stores were the main source of that revenue. The following year, DH sold two smaller department store chains and decided to put even more money into its discount business. Also in 1984, DH merged Dayton's and Hudson's into one large department store division based in Minneapolis.

Department Store Pioneers

Joseph Lowthian Hudson (1846-1912) was a thirty-five-year old English immigrant when he opened his first store in 1881. George Draper Dayton (1857-1938) was a successful banker and landowner when he took over the Goodfellows store and renamed it Dayton's. Although they had different backgrounds, Hudson and Dayton shared the goals of providing excellent service and products to their customers.

Hudson came to the United States in 1855 and settled in Detroit, Michigan, in 1877, where he went to work for retailer C. R. Mabley. When Hudson went into business for himself, his former employer was his main competition. The two store owners waged advertising wars, taking out full-page ads in the Detroit papers. By 1891, Hudson was able to build an eight-story building, which stood until the 1920s. His next store was his largest, eventually growing to more than 2 million square feet. Hudson also had an interest in Detroit's leading industry, automobile manufacturing. With several partners, he formed the Hudson Motor Company in 1909. For a time, it was the third-largest automaker in the United States. Hudson, however, never lived to see the glory days of that company: he died in 1912 on a trip to England.

Dayton was also a transplant. He was born in New York in 1857, and settled in Minnesota around 1880. Thanks to successful business dealings, he was able to buy a bank in Worthington and real estate in Minneapolis. After Dayton entered the retail business, his sons Draper and Nelson joined the firm. They eventually took over managing the store. The elder Dayton died in 1938, and in the late 1940s, the five sons of Nelson Dayton took control of the business. After the Dayton-Hudson merger in 1969, the Daytons continued to run the business until the mid 1970s.

In the retailing industry, Dayton Hudson won praise for its smart management style. It made Mervyn's a "soft-goods" store, selling mostly clothing at prices cheaper than department stores, but with better quality than the clothes sold at most discount stores. Target was known for its wide aisles and clean displays that made shopping easier than at most discount stores. The stores also tried to carry the latest fashions. In 1988, a Target executive told Women's Wear Daily, "Just because our consumer may be price-sensitive doesn't mean she is backward when it comes to fashion."

Despite continued success with Target, DH still had some problems. In 1986, profits fell for the first time in sixteen years. The next year, the company struggled to fight off a hostile takeover attempt from another retailer, the Dart Group. DH kept its independence and grew again in 1990, when it purchased Marshall Field's stores from B. A. T. Industries. Dayton Hudson paid $1.1 billiontoo high a price, according to some business experts. CEO Macke, however, told Forbes the deal was "a marriage made in heaven." The purchase made DH the major department store chain in the Midwest and added Marshall Field's prestige to the entire company.

On Target for More Growth

The Marshall Field's deal gave DH sixty-four department stores, but the company was more committed to its discount chain. In 1990, the first Target Greatland opened, featuring more floor space and products than the typical Target store. DH planned to open several more Greatlands and hundreds of Targets. By the end of the decade, DH also opened Target Superstores, which combined a Greatland with a grocery store. Target's service and style remained high, and the company made its first moves into the Northeast, becoming a national chain for the first time. Target ads featured its bulls-eye symbol, and the company referred to its customers as "guests."

Entering the twenty-first century, DH made several name changes. The corporate name change to Target was followed in 2001 with the renaming of all Dayton's and Hudson's stores to Marshall Field's. The new Target Corporation also showed its commitment to the Internet, launching target.direct in 2000. The new division handled Web commerce for the three store chainsMarshall Field's, Mervyn's, and Targetas well as for giftcatalog.com. This site offers goods sold through Target's mail-order catalogs, Seasons (gifts for women), Wireless (home accessories and entertainment), and Signals (international products and items relating to history, science, and the arts).

In 2002, Target had just over one thousand stores in forty-seven states; the total number of Target Corporation stores was more than thirteen hundred. Total annual sales were almost $40 billion under CEO Robert Ulrich, who took over in 1994. Target's alliances with popular fashion designers and architects, such as Michael Graves, Marc Ecko, and Todd Oldham, boosted Target's image as the place to shop for "cheap chic." In its ads, Target promised customers they could continue to "expect more, pay less."

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