'Cheap Chic' Chief Ulrich to Retire

Steinhafel to Step Up as Target CEO

James Mammarella, January 14, 2008

Call it the "end of an era," as Bob Ulrich, chairman and ceo of Target Corp., will retire as ceo May 1, to be succeeded by company president Gregg Steinhafel; Ulrich will remain as chairman through the end of the fiscal year.

Ulrich, who will turn 65 in April, for more than 20 years has presided over a retailer that has been widely successful at that most elusive of retailing goals: differentiation.

Forty-one years ago, in 1967, Ulrich started as a merchandising trainee at Dayton's department store, the leading retailer in Minneapolis. Today he reigns over a company with $60 billion in annual sales and a brand admired the world over.

There are numerous department store companies that have spawned discount chains or other complementary retail operations. Seldom however, has one of those discount offspring become the ruler of the roost — but that is what happened after Ulrich moved within the Dayton Hudson corporation to become president of Target Stores in 1984, later being promoted to chairman and ceo of the Target division.

With Ulrich at the helm, Target proved there was room for a discount general merchandise format to compete successfully against the triumphant discounting behemoth of the day: Wal-Mart. The differentiating factors: fashion, marketing and product development.

Ulrich did not lack detractors.

To many on Wall Street during the 1990s, Target was agonizingly lax in its testing of supercenters, preferring to go slow on groceries at a time when Wal-Mart and Kmart were building hundreds of new supercenters each year. Even more frustrating to stock analysts was the corporation's refusal to spin off the stumbling Mervyns mid-tier chain or the stodgy Dayton Hudson upstairs unit — their suggested means of "setting Target free" for massive capital-infused expansion.

Ulrich argued that all three divisions benefited by virtue of shared talent, competence and scale of operations. "The Power of One" was the Ulrich mantra. Under his leadership, for example, fashion development teams and merchandise managers and buyers from all three store groups would often travel together for trend meetings and market weeks. Direct-sourcing, too, became a method Target sought to master — much to the chagrin of some traditional manufacturers.

On the branding front, Target was an early adapter of direct-to-retailer licenses. The company last week renewed one of the first — its 1995 deal with casual lifestyle fashion brand Cherokee — through January 2012, proof of the staying power a brand can reach within the Target model.

Current home textiles brands with a position at Target range from Cannon, Fieldcrest, Waverly and Woolrich to designer exclusives Isaac Mizrahi, Simply Shabby Chic and Thomas O'Brien.

In the advertising and marketing arena, Target has spent three times as much, proportionately, as Wal-Mart, and done it with brash style and a focus on trend-right taste. A bold example was its massive outdoor ad campaign, a decade ago, in Times Square and other New York hot spots years before any Target store opened within 20 miles of Manhattan. By blasting its bullseye, sponsoring high-profile cultural events, and popping up with holiday micro-stores on land and afloat around Gotham, Target leveraged the gleam of New York and the mobility of its residents and visitors to its own advantage.

In 1994 Ulrich was named chairman and ceo of Target Corporation — its name change a recognition of the dominance of the upscale discount format — and in the last few years he directed the company's sell-off of the Mervyns and Dayton Hudson businesses.

There are some in the home textiles supplier community who would prefer that 1,591-store Target — among the most direct-sourced of retailers — did more buying from them. There is no particular reason to hope that radical change will come from Ulrich's successor, however.

The 52-year old Steinhafel, who joined target in 1979, advanced through merchandising, store operations and sourcing posts before being named evp merchandising in 1994 and then president of Target in 1999. He joined the board of directors last year. While some of Target's all-star marketing execs have come and gone, Steinhafel has been the company stalwart on the product side.

And why should anyone wish for major alterations at Target?

Besides paying regular dividends, Target Corp. has made one three-for-one and two two-for-one stock splits since 1995.

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