Ulrich, who will reach the company's mandatory retirement age of 65 in April, will remain as board chairman through Jan. 31, 2009, when the company's 2008 fiscal year ends.
Neither executive was available for comment Wednesday.
Steinhafel takes the helm at a challenging time for Target and other retailers as consumers curb spending in the face of higher prices for food and fuel combined with tighter credit. The stock has been trading at 52-week lows and is down nearly 30 percent from July highs of more than $70 per share. It closed Wednesday at $49.92.
December holiday sales figures will be released today, and analysts expect sales to fall 2 to 5 percent.
Target telegraphed its succession plans in 1999 when it promoted Steinhafel to president and then again last year when it named him to the board of directors. Known as the company's top "style cop," Steinhafel, 52, has deep roots as a merchandiser.
Target did not indicate when it would name Steinhafel's replacement as president.
Retail analysts don't expect any major shifts in the discount retailer's direction.
"This seems to be one of the smoothest transitions in the last several years among large retailers," said Jeff Klinefelter, an analyst with Piper Jaffray & Co. in Minneapolis. "There was seemingly never any controversy, no serious debate, no horse race between the candidates. It was a smooth, deliberate, gradual transition."
Both men have spent their entire careers at the Minneapolis-based retailer.
Ulrich is a native of Minneapolis and graduate of the University of Minnesota. The son of a 3M engineer, Ulrich began his retail career in 1967 as trainee in the merchandising department at Dayton Corp., and he rose through the ranks quickly.
He became president of Target in 1984, which then was a division of Dayton Hudson with 216 stores. He was promoted to chairman and CEO of that division in 1987.
In 1994, Ulrich took over as chairman and CEO of Dayton Hudson Corp., and he would oversee both the corporate name change to Target and the selling off of all other department store divisions, including Dayton's, Hudson's, Marshall Field's (acquired in 1990) and Mervyn's.
"He had a 'power of one' vision of the company," Klinefelter said, referring to Ulrich's quest to use the unique strengths of each of the divisions to drive overall profits. Ultimately it meant selling them off. "It's really the hallmark of his era."
Ulrich positioned Target as an edgy yet affordable choice among low-price chains. The red-and-white bull's-eye logo is one of the most recognized brands in the world.
"Bob was always laser-focused on the direction of the company and very direct in getting things done," said Al Dittrich of Retail Associates, a leasing company. "I mean, the guy coined the term: 'Speed is life.'"
Dittrich worked with Steinhafel and Ulrich for more than two decades while at Dayton Hudson Corporation's department store division.
"I think Gregg embodies the whole element of Target being on the front end of things," Dittrich said. "Will his style be different? Certainly it'll be different. Every leader's style will be different. But he's an outstanding choice for leading Target."
Steinhafel is a native of Milwaukee, whose family runs a furniture company now in its third generation. He joined Target in 1979 as an assistant buyer in the paint department, and he was promoted to executive vice president of merchandising in 1994.
Activist for change
William Ackman of Pershing Square Capital Management, who has been buying up Target stock this past year and is pushing the retailer to use the sale of its credit-card receivables as a way to boost its stock price, complimented Ulrich for doing "a phenomenal job for shareholders and the company for almost 40 years."
"I believe they are going to do the right thing for shareholders whether [Ulrich] is staying or going," Ackman said. "At the end of the day, it's not going to affect their decision" over whether to sell Target's $8 billion in credit-card receivables.
Klinefelter, who has covered Target for a number of years, doesn't think the changing of the guard in the midst of such turmoil will cause alarm on Wall Street.
"A challenging economy is a great opportunity for a CEO to demonstrate his leadership, strategic thinking and his ability to deliver results in both good and bad times," Klinefelter said. "It's a great opportunity for Gregg to put his mark on the organization."
Staff writer Chris Serres contributed to this report. Jackie Crosby • 612-673-7335