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Douglas Dayton, 88: ‘Disruptive innovation’ hit the bull’s-eye

  • Article by: DEE DEPASS , Star Tribune
  • Updated: December 27, 2013 - 9:10 AM

He founded the first Target store in 1962 as a discount alternative to the family’s Dayton’s department store.

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Douglas Dayton

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He was a quiet fellow. No quips or big gestures. Steady.

But a revolution in retailing was churning beneath Douglas Dayton’s calm exterior.

In 1950, he and his four brothers had inherited the lone, upscale Dayton’s department store in downtown Minneapolis, which was generating $50 million in sales.

Though department stores would remain the heart of their operation for years, the brothers were curious about “discounting” and decided to give it a go with youngest brother Douglas at the helm.

When the first Target store opened in Roseville on May 1, 1962, it didn’t resemble schlocky discount stores of the time. Dayton demanded wide aisles and bright lights. Stock was beautifully placed and “guests” were greeted with service and stylish fashions at low prices. That year he opened four more Targets in the metro area before sprouting the operation into other states.

“Department retailers didn’t recognize [discounters] as legitimate retailers,” Dayton said. “Obviously the customers did.”

Soon, brother Ken complained that Target was siphoning off sales from the department stores. Harvard Business School professors began lecturing about the “disruptive innovation” Dayton was creating by pitting upstart Target’s cheap chic against the legacy Dayton’s highbrow offerings.
In 1968, Dayton left Target, returning to Dayton’s corporate headquarters. Target was growing at 40 percent a year. Stores popped up all over.

Just over a decade later, Target sales hit $1 billion, its profits and prestige overtaking the parent firm. Dayton left retail to delve into venture capitalism and philanthropy.

In 2000, Dayton-Hudson Corp. became Target Corp. Today, it boasts $78 billion in sales, 1,700 stores and 361,000 workers.

Not bad for a shy guy.

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