Take Your Mark-downs Early

My first job in business (1978-1979 and one speech in 1980) was as a communications analyst for the Minneapolis-based retailer Dayton Hudson (that we now know as Target Corporation). Part of my job was to write speeches for Steve Pistner, the president and chief operating officer of Dayton Hudson. Steve had won the #2 job at Dayton Hudson by steering Target through the recessions of the early 1970's.

The unconfirmed legend was that things had been so tough for Target during the recessions that some in Dayton Hudson had considered jettisoning their Target division. If that was true, then Steve Pistner was the executive who "saved" Target, now America's #2 retailer.

Pistner was a Humphrey of business. A person of great ideas. A degree in psychology. Steve would tell me: Bob, we don't talk about bed sheets and display racks. We talk about what motivates our customers and how we can serve them better.

The Pistner formula for Target coming out of the recessions successfully was to set and achieve industry-leading standards. Among discount retailers, Target stores would become the cleanest (still to this day, walk into a Target at 7 pm on a Saturday, then check out the nearest Wal-Mart...where would you shop?). Target would have the clearest sight-lines and signage so that customers could immediately read and navigate the stores. Target would always be in-stock on top-selling and advertised merchandise. Customers might come back once for a missing item, but never come back twice.

Among the lessons Pistner drew from managing through recessions: (1) keep your overhead low...don't lard on expenses (staff) during the good times; (2) take your mark-downs early...we knew within 6-months of opening a department store that it was too difficult for customers to navigate...should have blown it up and started over and, (3) if you have to work for a living there is no better job than managing a troubled company...at least you'll get credit for the turn-around.

Steve said his best speech was in 1980 to the Young Presidents Organization of Minneapolis on "The Store of the Future." He told them that the wheel-of-retailing constantly turned to give customers better goods at lower prices. He bemoaned department stores operating at a loss 9-months of the year to make their profits during the holiday season.

Pistner's Store of the Future would minimize operating costs by eliminating the stores themselves. Remember, he was speaking pre-Web. He proposed video kiosks in 7/11 stores updated weekly with new disks displaying the latest merchandise offerings. Customers would view the products on the disks, place their orders, and have their choices delivered to their homes or offices from a regional merchandise warehouse.

So in the summer of 1980, Steve Pistner suggested that the next big opportunity in retailing was to dramatically reduce real estate, energy and staffing costs by making it possible for customers to select their merchandise through a video (disk kiosk) and receive it at their home or office. Amazon?