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7:28 pm
December 13, 2012

SimonGrey

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posts 33

Written in 2003, this book takes a decidedly narrow look at what the retailer Target into such a large and profitable enterprise. While Wal-Mart tends to receive considerably more attention for its relatively short rise to dominance, going from one store to a major American brand in a just a couple of decades, Target is equally, if not more deserving of a similar corporate focus.

In fact, as you read the book, you will be struck by how similar the stories of Wal-Mart and Target really are. Both were basically non-players in the national retail market in the 60s, only to become the dominant players by the 90s. Both reflect the American values of business and value. Both began with a focus cutting prices and providing customers with great service. The differences between the two, though, didn’t really begin to appear until both reached market dominance in the 90s. At that point, Wal-Mart doubled down on low prices, while Target focused on providing good value. The distinction doesn’t seem like much, but it makes all the difference.

Rowley traces the development of Target from its days as a retailer named Dayton. In the beginning, the Dayton family was looking to have the best retail store in St. Paul. They quickly succeeded and looked to expand. They began and bought other ventures, and eventually Target was born. For a while, the Target retail brand was secondary to the Dayton brand, until the Dayton family discovered that shoppers actually like Target a whole lot more. They then decided to set to work on expanding the Target brand.

The rise to dominance wasn’t easy. There was trademark scare in the 60s and hostile takeover scare in the late 80s that was only thwarted through some grassroots political activism. In spite of this, though, Target positioned itself for long-term success by focusing on a couple of things. First, Target focused on being able to distribute good brands, especially in cookware and clothing. Instead of tossing out the cheapest Chinese manufactured clothing they could find, they instead hired mid-name or up-and-coming designers to design clothing collections for them. They also contacted B-list celeb chefs to design cookware lines, and they got mildly famous houseware manufacturers (Cuisinart and such like) to design collections for them.

However, Target did not allow their brand-chasing to lead to high prices. Instead of resting on the laurels of having major brands, as many big box department stores, like Macy’s, are wont to do, Target instead focused on providing customer with the most value—good quality at affordable prices. You won’t find, say, Gucci bags at Target, but you will find similarly-designed bags with similar quality for considerably lower prices. Thus, while Target doesn’t necessarily have the lowest prices, it will most likely give you the most bang for your buck.

Another interesting thing about Target is how it revolutionized business technology. Lots of attention is focused on how Wal-Mart used technology to revolutionize the retail industry, but Rowley is quick to point out that Target made several innovations of its own, including calculating profitability by the square foot (i.e. which store sections, which shelves, and so on were most profitable within a store). The inventor of this process was later hired by Wal-Mart and he implemented it there. Target was also responsible for a good number of business process innovations, such as its return policy (anything anytime anywhere), though that was later modified. More impressively, it’s Guide for Growth is still an industry standard. Target was also astute enough to develop the department store policy of issuing customers credit, another practice that has been widely aped. What makes Target so profitable? Well, luck and timing certainly play a role. The biggest retailers of the modern age got started in the 60s, and this is perhaps not merely an accident. Still, as the old saying goes, luck favors the prepared, and the Dayton family was certainly prepared.

The values espoused by the Dayton family are most likely what gave Target its best chance to succeed. The Dayton family emphasized things like honesty, integrity, and humility. The legends of the various Cos and Presidents of the company are more truth than fiction, like the time a company president called a cosmetics employee to rehire her after her manager fired her because she went beyond company guidelines to help a customer. Target has long emphasized integrity in its customer relationship, which is why most customers are return customers. As has long been the case, Target is more than willing to treat its customers right.

Furthermore, the Dayton family—and the management they’ve fired over the years—has a long history of humility. Management is always open for criticism from anyone. Blunt, direct feedback is preferred. No one’s ego is worth denying reality for, and so anyone can and should be open to feedback and criticism. From anyone. Honesty is also emphasized as well. Rowley recounts an instance where managers were called in to discuss where they were having difficulty in implementing Guide for Growth. The first manager to speak said that he thought the rules were wonderful and that his store had 100% compliance. The second manager to speak called him a liar.

Thus, in many ways, Target’s phenomenal growth is largely due to the company embodying the Mid-Western Lutheran work ethic—hardly surprising since the company was founded by Mid-Westerners and is headquartered in Minnesota. In a corporate world that is often plagued by short-sighted greed, dishonesty, and fraud, it’s certainly refreshing to see a business succeed because it does things the right way. Target is such a company, and its success has been well-earned, and On Target is worth reading simply to see how doing the right thing, coupled with a little luck, can lead to success.

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