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Corporate Startups 6 min

Target: from internal startup to the second-largest department store retailer in the US

Corporate Startup of the Week

Dressed in the iconic red bullseye logo, the first Target store opened doors to the public in Roseville, Minnesota in 1962. It was born from a new idea of a low-cost department store that would distinguish itself from other retail spaces by combining three elements that were in high demand by consumers but had not been seen together in the market yet – fashion, quality service, and low prices.

Nowadays, Target is the number two discount retailer in the United States, second only to Walmart. But in fact, Target didn’t start as its own independent company; it’s the result of many decades of knowledge, iteration, and hard work, and it was originally a small branch from another department store – Dayton’s.

Target’s founder, George Draper Dayton, was a workaholic from an early age. He became a banker who within ten years grew rich enough to buy the Bank of Worthington in Minnesota. At the same time, Dayton was also an active member in the Presbyterian Church, an interesting coincidence which ended up being essential to his future success.

In 1893, the Westminster Presbyterian Church in Minneapolis burned down. To help cover the cost of a new building, George bought their corner lot next to the demolished church and ended up raising a six-story building on the spot. Unable to find someone to rent it out, Dayton purchased the Goodfellow Dry Goods store and set it up in the space.

The shop opened in 1902 and gradually grew from one to several locations and branches, including the popular Marshall Field’s department store.

Dayton's first store. Credit: startribune.com

Dayton had the exceptional ability to understand his customers and their needs, delivering great in-store experiences. His shops were beautifully and thoughtfully designed, incorporating the latest research on store layout and lighting.

By the 1920s, it had become a multimillion-dollar business. The founder’s background as a banker and religious devotion provided him with the right mindset that allowed the company to grow. According to Presbyterian guidelines, no liquor was sold in the stores that were closed on Sunday and there was no business travel nor advertising on the Sabbath. They also didn’t advertise in a newspaper that sponsored liquor ads. George was also known to hand out candy to employees on Christmas Eve, an example of the family-driven company culture.

George Draper Dayton led the organization until his death in 1938. He left his son Nelson Dayton in charge, who took if from a $14 million business to a $50 million enterprise. Nelson ran the company along the moral lines of his father. They were one of the nation’s first stores to offer retirement and insurance policies to employees.

Nelson died in 1950 and, under the collective leadership of five Dayton cousins, the company entered a new era. They started by dropping the prohibition of selling liquor and soon they were doing business and advertising on a Sunday.

Then the cousins spotted an opportunity to create a new kind of discount store, targeted to a value-oriented audience that seek high-quality products. Most experts considered it a risky move because it could jeopardize the company’s dominant position in the market but that was when the Daytons proved themselves to be real visionaries. Target was so popular that it soon became the majority of the company’s business. Its launch was the first step in transforming the organization into one of the United States’ largest discount-store chains.

"As a marksman's goal is to hit the center bulls-eye, the new store would do much the same in terms of retail goods, services, commitment to the community, price, value and overall experience.”

Stewart K. Widdess, former Dayton's Director of Publicity
First Target store. Credit: pleasantfamilyshopping.blogspot.com

With Target, Dayton’s enterprise continued to push the envelope in retail. They were one of the first to introduce the “racetrack” store layout and provide a uniform look and feel throughout every different location, a design that prevails today. They were also early to debut their first planogram, a technique that still prevails today.

“The racetrack layout prevails today, (…) While department stores are typically laid out as a collection of shops, many of which may have distinctly different décor and may even be enclosed with walls, Target features a more open layout with broad sightlines for easy navigation.”

Nancy Devine, senior group manager at Store Planning and Design

In 2000, Dayton-Hudson was renamed the Target Corporation. Four years later, they cut the final strings from the department store industry by selling their Marshall Field’s branch to May Company who rebranded them as Macy’s.

Today, though still confined to the United States, Target is a universally recognized brand. Ranked number 39 on the Fortune 500 list of the largest US corporations by total revenue, the Target Corporation operates in every 1 of its 50 states.

The department store chain has spent the last decade focused on gaining market stability and spreading its proved formula throughout the states. Even though it has sounded quiet for a while, Target keeps pushing towards the future with projects like the Made by Design line, the ‘secret’ Studio Connect app, and its 'mockup store', where they test out store design ideas.

 

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Mariana Abreu

Innovation Journalist & Creative Content Creator

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