Email
Print
del.icio.us
digg
Comments
FeedRed Hot
The inside story of how smart marketing and innovative design transformed Target into an icon of cheap chic
By Joel Hoekstra
Photo by Darrell Eager (Photo Illustration)
(page 1 of 5)
It's easy to forget that less than a decade ago, America was frumpy. The French owned fashion, and the Italians had stylish cars and sleek sofas all locked up. Personal computers, arguably our greatest contribution to the modern world, came in just three hues: gray, beige, or black. (The bright blue iMac finally arrived on the scene in 1998—the same year the redesigned Volkswagen Beetle debuted.) Potato peelers with egg-shaped ergonomic handles? Toothbrushes resembling Brancusi birds? Teenagers carrying shiny iPods and shapely Nalgene-style water bottles? A decade ago, none existed. Today, all those things and other stylish products can be found at your local Target.Few other companies, in fact, have navigated the recent “mass class” trend as deftly as Target Corporation. The Minneapolis-based retailer has managed to turn creative product design, eye-catching advertisements, and savvy marketing into sales that topped $59 billion last year—and the dividends include a reputation that even competitors envy: An internal Wal-Mart memo leaked to the media last May acknowledged, “Target has been incredibly successful at resetting the bar of what people expect from a discount store. Their fundamental premise is democratizing great design…. They feel like the ‘new and improved’ while Wal-Mart often feels like the ‘old and outdated.’”
Target has burned red-hot in the past decade. Sales have more than doubled, the stock price has climbed fourfold, and the company’s stores have spread across the country like chickenpox at a birthday party. Not bad for a business that struggled to find its niche after it debuted in 1962 as a discount offshoot of Dayton’s department stores. (Kmart and Wal-Mart, incidentally, were founded the same year.) In hindsight, Target simply proved a slow starter. In 1979, nearly two decades after its birth, the company had just 80 stores. Today, it has 1,537.
So how did a small regional retailer outpace the pack, its bull’s-eye brand increasingly bright in comparison to Wal-Mart’s sullied smiley face? The story begins in the 1990s, the dawn of Target’s Golden Age as it were, when a new creative strategy—one that still animates the company today—began to take shape.
the IDEA
In 1984, Bob Ulrich, a longtime executive with Dayton Hudson Corporation, was named president of Target. Four years later, he hired John Pellegrene, Dayton’s marketing chief and a former executive with J. L. Hudson’s department stores in Detroit, to overhaul Target’s marketing department. With Ulrich’s blessing, Pellegrene, a dynamic, no-nonsense personality, quickly set about transforming not just the company’s marketing vehicles but the entire corporate culture.John Pellegrene, former executive vice president, marketing, Target: Target comes out of a different birth process than Wal-Mart or Kmart. If you look at the Ivy League of retail from 25 years ago, you’ll find Dayton’s, Bloomingdale’s, Marshall Field’s. The families who owned those companies ran them based on their taste levels—which kept quality high. They wanted to be first with the latest, newest merchandise.
Target was born out of that philosophy by one of the Dayton brothers. Even though it was a discount store, there were certain things that never strayed far from the department-store mentality. And because it was associated with Dayton’s and Minneapolis, people here gave it its own moniker. Target became Tar-zhay.
I think at that point [in the late 1980s] there were still two ways for Target to go: You could be Tarzhay, or you could be Wal-Mart. In my opinion, you couldn’t possibly be Wal-Mart, because they’d eat you alive or buy you. You couldn’t compete with Sam Walton. Even though you might match him on health and beauty aids, for example, that couldn’t be your niche. We had to be Bloomingdale’s—at a price.
Ann Aronson, former director, community-relations marketing, Target: John looked at Target as less of a commodities business and more of a place for design and fashion. He believed that a garden hoe didn’t have to be boring. You could apply design to everyday items—and, hey, it might appeal to people.
Pellegrene: One of the first marketing campaigns we did went like this: We took a $500 Adrienne Vittadini blouse and said, “What would you wear with this?” The answer: You’d wear black stirrup pants from Target for $12.99. To me, that said it all.
There were a series of these campaigns and, in my opinion, they were as valuable in shaping the internal organization as they were to outside sales. People inside the company had to be convinced that differentiation, fashion, and great design could work in a discount format. Beyond them, we had to convince movers and shakers in the entertainment world and in the design world that they not only could endorse Target, but they also could sell product at Target.
We wanted to get as many people as we could who were top guns in the entertainment and design industries to be associated with Target. I tried Cher, other celebrities. But nobody wanted to work with a discounter. There was a stigma.
The first breakthrough I had was Aretha Franklin. Aretha is a star’s star. If Aretha said it was okay, it’s okay, right? I think one of the reasons she did it is because she wouldn’t travel by air, and we were willing to come to her. So we flew to Detroit, where we owned J. L. Hudson, and asked if she would take this terrible piece of music we’d written and do something with it. She agreed. She sat down at the piano with a packet of cigarettes and belted out a fabulous song that became the theme for Target’s first Christmas campaign.
Aronson: Pellegrene was infusing the company with a marketing focus, looking at every area. He had the resources and a green light from the CEO to try things. We saw the results, in sales, in accolades, in great PR. I don’t think anyone had an exact vision of what this would become, but all the signs indicated that it was working.
Pellegrene: After we had Aretha, it was easy to go to a host of stars. And if all these cool people were doing marketing for Target, how far behind could the New York press and designers be? Well, not far, it turns out. We began talking with name brands that had never sold to discounters. Now Target has a lot of brand-name designers, but it didn’t then.
Comments may be edited for length, clarity, or appropriateness.
Reader Comments:
I just received my weekly Target ad in my Sunday paper and in the toys section, there was a picture of a little boy in front of a play workbench, and a little girl in front of a play kitchen.
Oh yeah, the marketing team are REAL revolutionaries over at Target.
Lisa T... What would you expect to see in the toy section playing with toys? Talk about missing the whole point of an article.