Target Corporation
| Target Corp | |
| Company type | Public (NYSE: TGT) |
|---|---|
| Industry | Retail (Department & Discount) |
| Founded | 1902 Minneapolis, MN |
| Headquarters | Minneapolis, MN |
Key people | Robert Ulrich, CEO & Chairman |
| Products | Retail goods and grocery such as candy, clothing, office supplies, consumer electronics etc... |
| Revenue |  $46.839 billion USD (2005) |
3,848,000,000 United States dollar (2022)  | |
| 2,780,000,000 United States dollar (2022) | |
Number of employees | 300,000 |
| Website | Target Corporate Site |
Target Corporation NYSE: TGT was founded in Minneapolis, Minnesota in 1902. It is the sixth largest retailer in the United States behind Wal-Mart, The Home Depot, Kroger, Sears Holdings Corporation, and Costco.[1] It sells more gift cards than any other retailer in the United States and is also the third-largest seller of music in the United States.[2] It is the largest company by revenue based in Minnesota.
History
The company was founded in 1902 when George Dayton opened a retail store named Goodfellows in downtown Minneapolis. In 1903, the store changed its name to the Dayton Dry Goods Company, and it changed its name again to the Dayton Company in 1910. In 1956, The Dayton Company opened Southdale, the world's first fully-enclosed two-level shopping center in suburban Minneapolis.
In 1962, the Dayton Company entered discount merchandising by opening its first Target discount store in Roseville, Minnesota, a suburb north of St. Paul. By 1979, it would be the company's top revenue producer. In 1967, the Dayton Corporation was established and it went public with its first offering of common stock. In 1969, the Dayton Company merged with the J.L. Hudson company. In 1978, the company acquired Mervyn's and becomes the 7th largest retailer in the United States, and in 1990 it acquired Marshall Field's. Dayton Hudson Corporation changed its name to Target Corporation in 2000; by then, more than 75 percent of the corporation's revenue came from the Target division. In 2001, Target Corporation announced that its Dayton's and Hudson's stores would operate under the Marshall Field's brand. The three brands had been operating as a single unit, the Department Store Division.
On March 10, 2004, Target Corporation announced it had hired Goldman Sachs Group to analyze options for selling its Marshall Field's and Mervyn's chains of department stores. Three months later, on June 9, 2004, Target Corporation announced its sale of the Marshall Field's chain and several Mervyn's stores to St. Louis, Missouri-based May Department Stores Company, which became effective July 31, 2004. On July 21, 2004, it announced the sale of Mervyn's to an investment consortium including Sun Capital Partners, Inc., Cerberus Capital Management, L.P., Lubert-Adler/ Klaff and Partners, L.P., which was finalized September 2.
Today, Target Corporation operates its retail division under the banner of 'Target'. The company owns several other subsidiaries, which include:
- Target Financial Services (TFS)
- This subsidiary issues the Target REDcard and Target Card (formerly the Target Visa and Target Guest Cards respectively), issued through Target National Bank.
- Target Sourcing Services / Associated Merchandising Corporation (TSS/AMC)
- This global sourcing organization locates merchandise from around the world for Target and helps import the merchandise to the United States. Such merchandise include garments, furniture, bedding, and towels. TSS/AMC has 27 full-service offices, 48 quality-control offices, and seven commissionaries located throughout the world, and employs 1,200 people. TSS/AMC engineers are responsible for evaluating the factories that do business with Target Corporation for quality, as well as labor rights and transshipment issues.[3]
- Target Commercial Interiors
- This subsidiary provides design-services and furniture for office space. Currently, Target Commercial Interiors has an unusually high market share of Fortune 500/1000 business customers, and are expanding to attract small to medium sized businesses, as well as home offices. This subsidiary has six showrooms in Illinois, Minnesota, and Wisconsin, including a first-of-its-kind retail concept store and showroom in Bloomington, Minnesota that opened on June 23, 2005.
- Target Brands
- This subsidiary owns and oversees the company's private label products, including the grocery brands Archer Farms and Market Pantry. In addition, Bullseye Dog is a trademark, and the Bullseye Design and 'Target' are registered trademarks of Target Brands.
- target.direct
- This subsidiary includes Target.com amongst other ventures, and owns and oversees the company's e-commerce initiatives. Founded in early 2000, target.direct is a combination of the company's e-commerce team and its direct merchandising unit into a single, integrated organization. In 2002, target.direct and Amazon.com created a partnership where Amazon.com would provide order fulfillment and guest services for Target.com, and to this day Target Corporation's e-commerce website still uses Amazon.com's e-commerce system.[4]
Retailing division
Target Corporation's discount retail chain in the United States has 1,400 stores in 47 states (excluding Alaska, Hawaii, and Vermont) that operate under the mastheads of Target, Target Greatland, and SuperTarget. The first Target store opened in 1962 in Roseville, Minnesota. That store was closed and demolished on January 8, 2005 to make room for a SuperTarget. Target Corporation has aggressive plans to have 2,010 stores open by the year 2010.
Target
Target stores are generally 95,000 to 125,000 square feet (12,000 m²) and carry hardlines ("normal" products and goods), softlines (clothing), and a limited amount of groceries, usually non-perishable. Specifically, Target stores carry clothing, shoes, jewelry, health and beauty products, electronics, compact discs, DVD, bedding, kitchen supplies, sporting goods, toys, pet supplies, automotive supplies, hardware supplies, and food. They also carry seasonal merchandise such as patio furniture during the summer and Christmas decorations during November and December. Many stores also have one-hour photo processing, a portrait studio, an optical store, and a pharmacy. Stores opened in 2004 or later also include the expanded snack bar that is featured in Target Greatland locations.
Target Greatland
Target Greatland stores average about 150,000 square feet (14,000 m²) and carry a larger selection of general merchandise than basic Target stores. However, they do not have a full line of groceries. Prominent features include double entrances on single level stores along with an expanded snack bar. The snack bar may include a Pizza Hut Express, Taco Bell Express, and/or a Starbucks.
The first Target Greatland opened in Apple Valley, Minnesota in 1990 and has since been remodeled and expanded, becoming a SuperTarget.
SuperTarget
SuperTargets are about 175,000 square feet (16,000 m²) and carry everything a smaller Target does in addition to a grocery store, including produce, deli, meats, and baked goods. Many SuperTargets also feature a Starbucks coffee shop, a Pizza Hut Express, a Wells Fargo Bank, portrait studio, and an optical store.
In the past, some SuperTargets featured an E*TRADE trading station instead of a Wells Fargo Bank. However, in June 2003, E*TRADE decided to remove all E*TRADE branches from their SuperTarget locations [5] without advance notice. This sudden move was not initiated by Target Corporation. Mitchell Caplan, E*TRADE's CEO, said that "We were not able to make it into a profitable distribution channel...[w]e're better off exiting." E*TRADE also sent a letter of notification to their customers informing them about this change.
The first SuperTarget opened [6] in Omaha, Nebraska in 1995, and the second SuperTarget opened in Lawrence, Kansas later that same year. Currently, Target operates 158 SuperTarget stores in 21 states.
Urban stores
There are about 30 multi-level stores in urban areas (including downtown Minneapolis), where a one-level Target is not practical. One unique feature used by these stores is a specialized escalator, called a Vermaport, used to transport shopping carts between levels. This concept has also been used to build Targets from former Montgomery Ward and Younkers stores.
While many Target stores share a fairly common layout, the company has been known to be flexible with its designs. For example, the urban Target store located in downtown Minneapolis opened on October 10, 2001, only two blocks away from the site of the 1902 Goodfellows store and a few blocks away from the Target Center arena. This particular Target store features a three-story glass entrance and a design that sets itself apart from other suburban Target stores. This urban store alone cost Target Corporation $16.3 million USD and the city of Minneapolis $59.9 million USD to develop. Similar urban Target stores with their own unique designs exist in Brooklyn, New York, Pasadena, California, and Stamford, Connecticut.[7]
Distribution centers
Target Corporation currently operates 23 distribution centers across the United States. These distribution centers ship items directly to the Target stores that do not come directly from the vendor, such as greeting cards and soda, where the vendor supplies them directly. Also, unlike Wal-Mart, Target's grocery selection does not come from their own distribution centers, but from the companies that Target has partnered up with. For example, the produce carried in SuperTargets comes from Supervalu distribution centers.
On August 9, 2004, Target announced to their suppliers that they were going to perform a trial on the effects of radio frequency identification on the efficiency of supply chain management in the Dallas/Fort Worth, Texas area. This trial involved one Target distribution center and ten nearby Target stores. Here, RFID tags would be placed on the bar codes of pallets and cartons to track the goods from the suppliers to the distribution center, and from the distribution center to the stores.[8]
Positions
Here are some examples of positions held in a typical Target store:
- Store Team Leader
- Commonly, but improperly, called the Store Manager; is equivalent to the store managers of other retail stores.
- Senior Executive Team Leader
- Second highest ranking member of a Target store's staff; equivalent to Senior Assistant Manager. A store may or may not have one of these.
- Executive Team Leader
- A typical Target store has upwards of four of these, SuperTargets have more. Equivalent to department heads (i.e. Executive Team Leader for Guest Service, or ETL-GS)
- Team Leaders
- Operational managers, general supervisor position that oversees team member subordinates. Team Leaders receive hourly pay.
- Team Members
- All other employees. Includes sales floor team members, cashiers, cart attendants, guest service team members, and stockroom team members.
Differentiation
In order to create a niche for itself, Target is known for differentiating itself from competitors like Kmart and Wal-Mart by offering more upscale, trend-forward merchandise. In fact, Target refers to itself as a "discount department store" instead of just a discount store.
Some examples of how Target differentiates itself from competitors are:
- It does not play music in its stores, commonly known as elevator music and often distributed by Muzak. It also does not promote items or services through its public address system.
- Target calls its customers "guests" and its employees "team members". It derived this practice in the early 1990s from The Walt Disney Company. Middle managers are called "team leaders" and on-duty executives are called "leaders on duty."
- Target designs its stores to be more attractive than Wal-Mart by having wider aisles, drop ceilings, and a more attractive presentation of merchandise.
- Target has many exclusive deals with various designers, including Isaac Mizrahi, Michael Graves, Mossimo, and Liz Lange, among others. Target introduced its first designer line of products, the Michael Graves collection, in 1999. Wal-Mart and Sears Holdings Corporation (in both its Kmart and Sears divisions) have followed Target's lead by signing exclusive designers to their stores as well.
- Target also partners with well-established national brands to create exclusive collections for its stores. Recently Sony created a line of of electronics under the Sony LIV name geared towards women. The collection included a CD player that resembled a purse, and a CD player that was equipped to be mounted under the kitchen counter. Sometimes manufactures will create red-colored items, exclusively for Target.
- It does not sell firearms or tobacco. Unlike Wal-Mart, it does sell "explicit" CDs and "racy" magazines such as Maxim and FHM.
- Unlike its competitors, Target employs uniformed security guards whose main function is to provide a safe atmosphere for "guests" to shop in. This is in addition to Target-clothed and plain-clothed asset protection team members.
As a result of some of this differentiation, Target stores tend to attract younger and more educated customers than its competitors. The average (median) person who shops in a Target store is 46 years old, and is the youngest of all major discount retailers that Target competes directly against. The median household income of Target's customer base is roughly $55,000 USD. Roughly eighty percent of Target customers are female, and about 38 percent have children at home. About eighty percent have attended college and 43 percent have completed college [9].
Many of Target's biggest fans jokingly refer to the store as "Tar-zhay", as though it were a French word, a reference to its more upscale image compared to its competitors. This trend is incorrectly believed to have been started by Oprah Winfrey, when she used the French pronunciation to refer to the store on her television show. In fact, Laura Rowley's book On Target[10] traces the pronunciation back to 1962, the year the first Target opened. This pronunciation has led many people to incorrectly believe that the company is French-owned.
Service and equipment
Like some other retailers, Target gives its team members two-way radios to improve efficiency. These radios operate on the UHF frequency and are used to coordinate team member breaks, plan sales floor display sets, and, especially by new team members, to locate items on the sales floor for guests. Target also utilizes a large number of service phones and call buttons in their stores. When these are used/activated team members receive an automated notification on their two-way radios. The goal is "service in 60" (seconds), as otherwise the automated voice proclaims "service level exceeded." These service phones and call buttons use a technology provided by a company called INDYME, which makes solutions that broadcast messages over radio frequency. This allows automated voice recordings to be played over the two-way radios, and for cashiers, who don't have two-way radios, to use the service phones on their checklanes to broadcast over the radio frequency to the remote sales floor team members.
At its cash registers, Target tries to provide a minimum of "1+1" service (one guest checking out, one in line). When lines are longer than this, cashiers are encouraged to push a button on their register, which will cause the automated voice to call for help through the two-way radios. Most sales floor team members are also cashier-trained, and can thus help reduce the lines.
Additionally, many team members will carry an electronic scanning device with them, known as a PDT or an LRT. This device contains dozens of supply chain management software applications including ones to find the sales floor or back room location of an item, add or subtract an item to/from a location, and check the sales and regular price of an item. In 1974, Target introduced plan-o-grams to plan the placement of shelving fixtures and store products and to make the supply chain consistent. To this day, planograms are still being used, however the PDT now plays an important role in stocking shelves with new items (for example, transitioning the Seasonal department from into Christmas after Halloween) by retrieving the location for individual items from the planogram information and by updating the supply chain information system that the new items and sign fixtures are now on the shelves.
In Fall 2005, Target started making the phrase "Can I help you find something?" part of its brand. Team members are encouraged to ask guests this question when they see them on the sales floor rather than waiting to be asked for help. The philosophy behind is that it will drive sales by helping guests find what they are looking for (rather than potentially give up), and further differentiate Target from the often-perceived image of discount stores, of not having help available.
Gift cards
Target sells more gift cards than any other retailer in the U.S., and the unique designs of their cards contribute to their higher sales. Past and current designs include "scratch and sniff" (for example, peppermint during the Christmas season), glow in the dark, LED light-up, and even a gift card that doubled as a CD-ROM.
ClearRx
In 2005, Target introduced a major revision of prescription bottles, which it calls the ClearRx system. The redesigned bottles are flattened-out and turned upside down, providing more room for label. This system, invented by student Deborah Adler, was named one of Time Magazine's Most Amazing Inventions of 2005. [11]
Philanthropy
Target Corporation is consistently ranked as one of the most philanthropic companies in the country. According to a November 2005 Forbes article, it ranked as the highest cash giving company in America in percentage of income given (2.1%) [12]. Target donates around five percent of their pre-tax operating profit; it gives over $2 million a week in the communities it operates in. It also gives a percentage of charges from its Target Visa to schools designated by the cardholders. To date, Target has given over $150 million to schools across the United States through this program.
Target has a standard no-solicitation rule at its properties, as it wishes to provide a "distraction-free shopping experience for its guests". Exemptions to this policy were previously made for the Salvation Army to station its traditional red kettles and bell-ringers outside Target stores during the Christmas season. However, the company decided that it would no longer allow the Salvation Army to solicit on Target Stores' properties in 2004 because they believed it was a distraction to their guests and because an increasing number of other nonprofit groups also wanted to be granted exceptions to the "no solicitation" policy to support charity [13]. Many religious organizations objected to this decision, and called for boycotts of Target; however, this has failed as Target's financials over the last year have been setting company records and Target's same-store sales have been outperforming Wal-Mart. Additionally, when Target ousted the Salvation Army bell ringers, Target Corporation said that they planned on seeking an alternate method to donate to the organization. For example, Target donates annually to the United Way (the Salvation Army is a member of the United Way coalition).
On November 14, 2005, Target Corporation and the Salvation Army announced [14] a partnership called "The Target/Salvation Army Wish List," where online shoppers will be able to donate goods to the organization by buying them directly from Target.com [15] between November 25, 2005 and January 25, 2006. With this partnership, Target has guaranteed a minimum of $1 million of merchandise to the Salvation Army, making up the difference if the customers don't reach this goal, although the Salvation Army claimed that they typically raised $9 million with the red kettle program in front of Target stores. Annette Bauer, a spokeswoman for the Salvation Army's northern division, said "It is not going to make up the financial difference...but it is a great opportunity to partner with Target that might lead to other opportunities."
During disasters, Target Corporation is a major benefactor for relief efforts. Target provided monetary and product donations during the September 11th terrorist attacks on the U.S.; it also donated money for relief efforts for the tsunami in South Asia. Most recently, Target donated $1.5 million (U.S.) to the American Red Cross in the aftermath of Hurricane Katrina in 2005. It also allowed its store properties in the affected area to be used as command centers for relief organizations. It also donated supplies such as water and bug spray. Besides these major disasters, Target also regularly lends its support to disasters that are not as well known or only affect a regional area.
Criticisms
Target Corporation faces criticism. Lots of negative publicity was generated from the company's decision to no longer allow the Salvation Army to collect donations at its stores (see Philanthropy section above).
Target allegedly engages in many practices that rival Wal-Mart faces criticism for engaging in; however, because of Target's smaller size in comparison to Wal-Mart, Target often escapes criticism. In addition, many people may overlook Target's practices because of its successful marketing to differentiate itself as being more upscale. Some questionable practices, like Wal-Mart, that Target allegedly engages in include: low hourly wages (lack of living wage), opposition to labor unions, and its contribution to urban sprawl.[16] Liza Featherstone, author of Selling Women Short: The Landmark Battle for Workers' Rights at Wal-Mart, stated in an interview, "Aesthetically, we all like Target better, but their wages are in many places low or just as low, and they all represent the Wal-Martization of our economy, which is the exchange of low prices for poor work conditions." [17]
In 2002, the company came under criticism for carrying clothing with the number "88" embroidered on the clothing, which is known to be a white supremacist symbol. Target came under fire for not necessarily carrying the merchandise, but for their response. A customer informed the company of the offensive merchandise, but Target only responded with form letters and seemed to dismiss the customer's concerns. Only after the Southern Poverty Law Center and the media got involved, did Target pull the merchandise from its stores. [18]
A 26-year-old Missouri woman was refused emergency contraception when she handed her prescription to a pharmacist at a Target store in Fenton, MO, on September 30, 2005. The woman was told by the pharmacist, “I won’t fill it. It’s my right not to fill it.” She was told that she could go to a local Walgreens instead. The woman said, “When the pharmacist told me she wouldn't [fill the prescription], I went from disbelief to shock to anger. I guess I'm still pretty angry. It seems unbelievable to me that a medical professional could/would deny access to a federally approved drug and impose their personal beliefs in a professional setting. I am also grateful that I did not need it filled at that time. I don't know how it would be if I had just been raped or if the condom broke and I was feeling confusion and panic anyway -- and then was denied access and told to go across the street.”[19] Target allows employees to refuse to dispense medication based on religious beliefs; however, the employee must ensure that the prescription is filled by another pharmacist in a timely manner. Some defending Target would applaud the company for upholding the employee's freedom of conscience.
Target Australia
There is also a Target operating as a department store under a nearly identical logo and a similar style in Australia with over 250 stores. The brand in Australia is owned by Coles Myer. Target Corporation has never operated stores outside of the United States.
Diversity
Target Corporation was named one of the "100 Best Companies for Working Mothers" in 2004 by Working Mothers magazine.
Major sponsorships
Target owns the naming rights to the Target Center in Minneapolis. It also sponsors NASCAR, Indy Car, and IRL racing teams of Chip Ganassi Racing.
Notes and references
- ^ List of largest retailers in the United States. Note: this list separates the retailing divisions of Sears Holdings. - in .pdf format
- ^ Top 10 Music Retailers in the United States.
- ^ Target Corp's Vendor Compliance
- ^ News Article detailing partnership between Target and Amazon.com
- ^ News Article detailing E*TRADE's withdrawal from SuperTarget locations
- ^ Target Corp. Timeline - in .pdf format
- ^ Details on urban Target stores in Minneapolis, Minnesota, Brooklyn, New York, and Stamford, Connecticut
- ^ News Article detailing Target's use of RFID
- ^ Target Corp. Facts - in .pdf format
- ^ Rowley, Laura (2003) On Target: How the World's Hottest Retailer Hit a Bull's-eye John Wiley & Sons; Hoboken, New Jersey. ISBN 0-471-25067-8.
- ^ Time's Most Amazing Inventions of 2005
- ^ The Most Charitable Companies - forbes.com
- ^ News Article detailing the Target/Salvation Army Wish List
- ^ Salvation Army announces partnership with Target Corporation
- ^ Target.com's Salvation Army donation page. Note: Viewable between November 25, 2005 and January 25, 2006
- ^ CNN/Money: Can't touch "Teflon" Target
- ^ Interview with Liza Featherstone
- ^ News Article detailing "88" controversy
- ^ Target Pharmacist Refuses to Fill Emergency Contraception Prescription