Target Background and History

Target Background and History

With its familiar red bulls eye logo, Target Stores have become the United States’ second-largest discount chain behind giant Wal-Mart. Target offers merchandise and brand names that are aimed at a more upscale shopper than Wal-Mart.

With strong growth from expansion, Target reported $46.839 billion in sales and earnings of $3.198 billion in 2004. At the beginning of the year, the company operated 1,172 regular Target stores and 136 SuperTarget stores that include a supermarket as well. Target has stores in 47 states.

According to the company, Target reaches a younger customer with higher incomes than its competitors. The average age of Target customers is 45, the youngest of all major discount retailers. The median household income is roughly $57,000. Eighty percent are female and 40 percent have children at home. About 80 percent attended college and 44 percent completed college.

Many industry observers believe that Target is facing a critical crossroad in its strategic direction (both from a financial as well as operating standpoint). They question how it will sustain its double digit historical growth trend given its benchmark competitors size. In addition, Wal-Mart’s rapid expansion of its food business is expected to produce continued double-digit growth. While Wal-Mart has chosen the Supercenter to be its primary growth vehicle, Target views its own SuperTarget concept as an important contributor to growth, but not its primary contributor. Target’s traditional discount store remains its significant growth channel and considerable capital expenditures are devoted to the continued expansion of this concept.

Target Stores were first launched in 1962 as a chain of discount merchandising stores by the Dayton Corporation, an operator of department stores. In 1969, Dayton merged with the J.L. Hudson Company to become Dayton-Hudson. The company would go on to acquire the Marshall Fields and Mervyn's department stores but Target was the company's