Chairman and chief executive officer, Target Corporation
Born: 1944, in Minneapolis, Minnesota.
Education: University of Minnesota, BA, 1967.
Family: Son of a 3M executive (name unknown); married (wife's name unknown; divorced); children: two.
Career: Dayton Corporation, 1967–1969, merchandising; Dayton Hudson Corporation, 1969–1976, merchandising; 1976–1978, vice president and general-merchandise manager at Dayton's Department Stores; 1978–1981, senior vice president of stores at Dayton's; 1981, executive vice president for merchandise, sales promotion, and presentation at Dayton's; 1981–1984, president and CEO of Diamond's Department Stores; 1984, co-president of Dayton Hudson department-store group with responsibility for merchandising, marketing, and distribution; 1984–1987, president of Target Stores; 1987–1994, chairman and CEO of Target Stores; 1994–2000, chairman and CEO; Target Corporation, 2000–, chairman and CEO.
Awards: Discounter of the Year, DSN Retailing Today , 1989, 1992, 1995; Mass Market Retailer of the Year, Mass Market Retailer , 2000; Gold Medal Award, National Retail Federation, 2001.
Address: Target Corporation, 1000 Nicollet Mall, Minneapolis, Minnesota 55403-2005; http://www.targetcorp.com.
■ In the bleak discount-retailing landscape littered with the ruins of countless low-price chains that found survival impossible in the era of Wal-Mart, Target Stores managed not only to survive but to prosper. The chain's success had to be credited in large part to the genius of Robert Ulrich, the chairman and chief executive officer of the parent Target Corporation for more than a decade. While Bradlees, Caldor, Montgomery Ward, and others fell by the wayside and once-mighty Kmart was forced to reorganize under Chapter 11, Ulrich found a way for Target to distinguish itself from the rest of the pack. Most importantly for Target's shareholders, Ulrich managed not just to keep Target alfoat but to generate impressive growth in sales and profits.
One measure of Ulrich's success, of course, was his compensation, which for both 2001 and 2002 was declared the highest in the U.S. retailing industry by Home Textiles Today . The magazine reported on January 30, 2004, that Ulrich's 2002 pay—including salary, bonus, and stock options—totaled $18.2 million, up just over 20 percent from the $15.1 million of the year before. A distant second on the magazine's list of 2002's top-paid retailing executives was Lawrence Montgomery, the CEO of Kohl's, who pulled in a total of $12.2 million; Lee Scott, Ulrich's counterpart at Wal-Mart, was paid a total of $4.4 million.
Although talk of Target mounting a serious challenge to Wal-Mart's supremacy in the discount market may have elicited derisive chuckles in some circles, there were those who thought that if it could be done at all, Ulrich was the man to make it happen. After several years of pressure from Wall Street, Ulrich announced in March 2004 that Target Corporation was putting its Marshall Field's and Mervyn's divisions on the auction block. Both divisions operated department stores, the earnings of which accounted for less than 15 percent of Target Corporation's total annual revenue.
Marshal Cohen, the chief analyst at NPD Group, the market-information company based in Port Washington, New York, told Janet Moore of the Minneapolis Star Tribune that the evolution of a leaner, meaner Target suggested that Wal-Mart might have been in for "a rude awakening" (March 11, 2004). Cohen predicted that Target was going to "aggressively pursue the Wal-Mart customer." On the other hand, the retailing analyst Eric Beder of Northeast Securities in New York seemed skeptical that Target would fare well in a head-to-head battle with Wal-Mart. Beder said that in contrast to management's portrayal of the company, "People are going to be a little surprised maybe when they clean off all these negatives to see that the Target chain is not exactly that consistent growth vehicle" (March 11, 2004).
The son of a 3M executive, Robert J. Ulrich was born in Minneapolis, Minnesota, in 1944. He grew up in and around the Twin Cities and after high school enrolled at the University of Minnesota, from which he earned his bachelor's degree in 1967. Fresh out of college Ulrich joined a merchandising trainee program at Dayton Corporation, the Minneapolis-based operator of the upscale Dayton's department stores. After completing training, he advanced through the company's merchandising ranks in a series of positions of increasing responsibility. Posts held by Ulrich included sales manager, buyer, group manager, and divisional merchandise manager. In 1969, two years after Ulrich joined Dayton, the company merged with the Detroit-based J.L. Hudson Company to form Dayton Hudson Corporation. Like Dayton's, Hudson's department stores catered to a more affluent market.
By 1976 Ulrich had earned himself a vice presidency and the post of general-merchandise manager for the Dayton's division of Dayton Hudson. Two years later, after completing an executive training program at Stanford University, he was promoted to senior vice president for stores. In 1981 Ulrich was named president and chief executive officer of Diamond's Department Stores, another division of Dayton Hudson that was later sold to Dillard's. In early 1984 he became one of three presidents at Dayton Hudson. While his two copresidents were each responsible for regional groups of stores, Ulrich was charged with overseeing merchandising, marketing, and distribution for the entire chain. Later that same year Ulrich was named president of Dayton Hudson's Target Stores division, a chain of discount retail outlets that by the mid-1980s was generating annual revenues of more than $3 billion, making it the company's largest operating division.
In 1962, five years before Ulrich joined the company, Dayton's had opened its first Target store in Roseville, Minnesota. The Target outlets were Dayton's response to what it saw as a growing demand for brand-name goods at discounted prices in a convenient shopping environment. By the time Ulrich assumed Target's presidency in 1984, the chain had grown to 216 stores and was already being widely described as an upscale discounter, differentiating it from the other leading retail discounters such as Wal-Mart and Kmart. Further distinguishing Target from discount competitors was its early decision to refer to shoppers as "guests." Much of the chain's future growth and profitability would be predicated on just such distinctions. Under the direction of Ulrich, who in 1987 was named chairman and CEO of the Target division, Target stores more than doubled in number, growing to a total of 506 by November 1992. By the end of 1993 that number had grown to 554.
One of the first innovations in the Target franchise during Ulrich's tenure was the introduction of the Greatland store. Sensing a strong consumer appetite for larger stores, in the fall of 1990 the upscale discount chain opened its first Target Greatland store in the Minneapolis suburb of Apple Valley; others soon followed. The Greatland stores differed from other Targets in size: they were typically 20 to 50 percent larger than traditional outlets. The average Target Greatland covered roughly 150,000 square feet, more than three football fields. About half of the increased area was used for the display of additional merchandise, with the remaining half used to create a feel of greater spaciousness, allowing wider aisles, a larger restaurant, and more open areas.
In the spring of 1993 a classic David-versus-Goliath confrontation came to a boil when Ulrich fired back at Wal-Mart in response to marketing tactics he considered unfair. Wal-Mart ran a series of ads misrepresenting Target prices in markets served by both chains; Ulrich then launched a counteroffensive with ads headlined, "This never would have happened if Sam Walton were alive." (Sam Walton, the founder of the larger chain, had died in April 1992.) Of Wal-Mart's ad campaign, Ulrich told Women's Wear Daily , "I believe customers are being misled by Wal-Mart's inaccurate price comparisons" (March 25, 1993). Target contended that in some cases Wal-Mart had offered price comparisons on products not even available at the smaller chain.
With Target contributing an increasingly large proportion of Dayton Hudson's total revenues, it came as little surprise when in 1994 Ulrich was named to succeed the outgoing Kenneth Macke as chairman and CEO of Dayton Hudson Corporation. Commenting on the differences between the marketing styles of Macke and Ulrich, a Twin Cities retailing consultant familiar with both executives made an interesting observation when speaking to Aron Kahn of the St. Paul Pioneer Press : "If they were at a lemonade stand that was running into competition, Macke would try to get the customers in by charging three cents instead of five, and Ulrich would try to get them in with two varieties of lemonade" (April 14, 1994).
By the time Ulrich took over the reins of the parent company, Dayton Hudson was operating not only the Dayton, Hudson, and Target outlets but also Mervyn's department stores, acquired in 1979, and Marshall Field's, purchased in 1990. As had been the case for more than a decade, the Target stores continued to contribute the biggest share of Dayton Hudson earnings. In the mid-1990s Ulrich introduced SuperTarget, his answer to the giant retailing centers that had been launched earlier by Wal-Mart and Kmart. These supercenters blended the discounters' regular displays of general merchandise with the food and grocery offerings of a full-service supermarket.
Target's first supercenter, with 195,000 square feet of retailing space, opened in Omaha, Nebraska, and was soon followed by others in the Midwest.
By the late 1990s Ulrich's campaign to carve out a special niche for Target was winning praise from such distinguished American business publications as Forbes and Fortune , both of which profiled Target in lengthy articles during the first half of 1999. Michelle Conlin, writing in the January 11, 1999, issue of Forbes , observed that the chain's stores had managed "to market a hip image despite their discount prices." Some of Target's success could be credited to the interchange of information between Dayton Hudson's department stores and its discount chain. Of Target's success in attracting higher-income consumers to its stores, Ulrich told Conlin, "Our research shows that the higher the income, the better educated, the more the guests like to shop our stores" (January 11, 1999).
In her profile of Target in the May 24, 1999, issue of Fortune , Shelly Branch wrote, "The image of Target stores has gradually been transformed from typical discount chain to a hip store where even the rich and trendy can save money." Keeping the upscale discounter abreast of changing fashion trends and consumer tastes was a 22-member trend-merchandising team, the only such advisory panel of its kind in the discount business. Members of the team—affectionately called "Targeteers" by the Target designer Michael Graves—tracked trends, visiting stores around the globe, and tried wherever possible to anticipate the directions in which consumer tastes were headed. Ulrich told Branch, "We're constantly challenging our people to reinvent. Our guests have started to say, 'Hey, it's a lot more clever to shop at Target than it used to be'" (May 24, 1999).
A critical element in Ulrich's campaign to expand the Target franchise was the chain's edgy marketing campaign. Reporting on a February address to the 2003 Retail Advertising Conference by Michael Francis, Target's senior vice president of marketing, Lisa Bertagnoli of Women's Wear Daily described the chain's multilevel strategy to generate buzz for its stores and merchandise. The typical Target customer, according to company demographics, was about 44 years of age and had a household income of $54,000. Of its core constituency, 80 percent had attended college, 41 percent had children, and 80 percent were female. Target's goal was to retain its core consumer base while increasing business with younger customers. According to Bertagnoli, Francis told the National Retail Federation–sponsored conference that the discounter's future lay in the hands of trendsetters in terms of "style, haircuts, tattoos, body piercing—you name it" (February 10, 2003).
Target's efforts to make its bull's-eye trademark recognizable around the country got a solid vote of confidence in a brand-awareness poll conducted in 2002. Poll results showed that 96 percent of all Americans recognized and associated the red-and-white bull's-eye logo with Target, a higher level of recognition than the Ralph Lauren Polo pony or even the Nike swoosh. When the good news was delivered to Ulrich, as Francis reported at the conference, the Target CEO tasked his marketing chief to track down the remaining 4 percent of the populace and find out what the company was doing wrong. "And he wasn't kidding," Francis assured his audience (February 10, 2003).
Reflecting Target's dominant role in the financial fortunes of Dayton Hudson Corporation, on January 13, 2000, Ulrich announced that the company's name henceforth would be Target Corporation. At the time of the name change Target Stores accounted for a little over 75 percent of the corporation's total revenue. In announcing the name change, according to an Associated Press report, Ulrich said, "Target Corporation is a more appropriate name for the company and is also a more widely recognized brand name" (January 13, 2000). A year later Target consolidated its department store holdings, folding its Dayton and Hudson department stores into the Marshall Field's division. This reorganization left the company with three main retail divisions: Target, Mervyn's, and Marshall Field's.
As more and more price-savvy Americans turned to the socalled discounters to fill their consumer needs in the latter half of the 1990s, the contributions of Target's department-store brands—Mervyn's and Marshall Field's—to the corporation's bottom line shrank; Mervyn's in particular fell upon hard times. According to Janet Moore of the Minneapolis Star Tribune , in a 1998 presentation to security analysts Ulrich laid out an ultimatum for Mervyn's: he warned that the corporation "would pursue alternative ways to generate shareholder value" if the department-store chain failed to improve same-store sales over the following 12 to 18 months (March 11, 2004). Mervyn's failed to deliver, but Ulrich was reluctant to act, perhaps because of the intelligence the department stores offered Target Stores on changing consumer trends. But in early 2004 he could no longer ignore the decline in the department stores' fortunes and announced that both Mervyn's and Marshall Field's would be put up for sale.
As of early March 2004, according to the Minneapolis Star Tribune , Mervyn's had a total of 266 stores and 29,000 employees. In fiscal 2003 it had managed to post a pretax profit of $160 million on sales of $3.6 billion, down from the pretax profit of $238 million in fiscal 2002. Marshall Field's, with 62 stores and 25,000 employees, reported a pretax profit of $107 million on revenue of $2.6 billion in fiscal 2003, off sharply from its fiscal 2002 profit of $135 million. In contrast, Target Stores in fiscal 2003 earned almost $3.5 billion before taxes, up significantly from the nearly $3.1 billion of fiscal 2002. Revenues per square foot at Target outlets edged up to $282 in fiscal 2003 from $278 the previous year, while revenues per square foot were down at both Mervyn's ($165, down from $178) and Marshall Field's ($178, down from $180) during the same period. Some security analysts speculated that Target Corporation's stock would be likely to rise if it succeeded in selling off its department-store brands, allowing it to focus exclusively on its successful Target franchise.
Spelling out his vision for Target Stores in the short-term future, Ulrich projected in the company's 2003 annual report that the discount chain would add 95 to 100 new stores in 2004, for a net increase of 80 to 85 stores after taking into consideration closings and relocations. Ulrich also promised that Target's new store design, scheduled to be introduced in 2004, would be "more pleasant and inviting and promote our goal of being the preferred shopping destination for our guests" ("On Target: Full Speed Ahead").
Ulrich was not without his critics. His high level of compensation predictably drew fire from union workers protesting what they considered unfair treatment at the hands of Target management. At Target's annual shareholders meeting in May 2003, labor organizers handed out leaflets contrasting Ulrich's $19.2 million compensation package with the reduced pay, benefits, and hours of store employees. At about the same time Ulrich was sharply criticized by Corporate Library, one of the country's leading shareholder-advocacy groups, according to a report by Neal St. Anthony in the Minneapolis Star Tribune . Corporate Library gave Target's CEO low marks for slipping out of the company's annual meeting without answering a single question from shareholders.
Ulrich, who was divorced, lived in a lavish home in the Minneapolis suburb of Edina. He had two grown children, Curt and Jacqueline. A member of the Committee to Encourage Corporate Philanthropy, Ulrich worked hard to see that Target made a positive contribution to the communities in which it operated. One of the corporation's pet causes was education, as exemplified by its Take Charge of Education program, which was launched in 1997. Under the program each week the company gave $2 million back to communities across America. According to the company's Web site, "portions of these funds are dedicated to specific education programs and initiatives, created by Target, to directly improve funding for schools and opportunities for students" ("Community Giving: Take Charge of Education"). Ulrich also served on the board of the National Retail Federation and in early 2001 received the federation's Gold Medal Award.
See also entry on Target Corporation in International Directory of Company Histories .
Associated Press, "Retailer to Change Name to Target," Wisconsin State Journal , January 13, 2000.
Conlin, Michelle, "Mass with Class: Retailing Discounting Has a Dowdy Image, but Target Is Making Low-Price Shopping Hip," Forbes , January 11, 1999.
Bertagnoli, Lisa, "The Buzz around the Bulls-Eye," Women's Wear Daily , February 10, 2003.
Branch, Shelly, "How Target Got Hip," Fortune , May 24, 1999.
Chakravarty, Subrata N., "Planning for the Upturn," Forbes , December 23, 1991.
"Community Giving: Take Charge of Education," Target Corporation, http://target.com/target_group/community_giving/take_charge_of_education.jhtml .
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Moore, Janet, "Bull's-Eye Meets the Smiley Face: Target Gets Ready to Take On Wal-Mart," Minneapolis Star Tribune , March 14, 2004.
——, "Castoff Flagship: Targeted; Marshall Field's and Mervyn's Stores Up for Sale," Minneapolis Star Tribune , March 11, 2004.
"On Target: Full Speed Ahead," Target Corporation, http://ccbn.mobular.net/ccbn/7/524/573/ .
Palmieri, Jean E., "On Target: With Exclusive Merchandise and Edgy Marketing, America's Coolest 'Upscale Discounter' Hits the Mark," Daily News Record , April 15, 2002.
Pinto, David, "Ulrich Is MMR Retailer of the Year," Mass Market Retailer , January 8, 2001.
Pogoda, Dianne M., "Macke to Exit Dayton Hudson: Ulrich Is Named Successor," Women's Wear Daily , April 15, 1994.
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.
"Target Raps Wal-Mart on Price Claims," Women's Wear Daily , March 25, 1993.
Tosh, Mark, "Supercenters: The Race Is On," Women's Wear Daily , June 7, 1995.
"Ulrich Holds On to Top Spot," Home Textiles Today , January 30, 2004.
"Ulrich Named President of Target Stores," Daily News Record , November 14, 1984.
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