How Target Found Its Grooviness

Just over 10 years ago, Target (TGT) was known for some of the coolest advertisements on television or in fashion magazines. However, its stores back then didn't appear that different from a Wal-Mart (WMT). It was neater -- maybe.

But in the mid-to-late 1990s, Target introduced housewares and apparel designed by a slew of architects and designers like Michael Graves and Mossimo Giannulli. Soon, design became the tool that distinguished Target from other discount stores. Target became known as Tarzhay among the trendy, a hip place to shop where you could get Cynthia Rowley bedding, Thomasville and Shabby Chic furniture, and Isaac Mizrahi clothes at affordable prices.

Robyn Waters served as vice-president for trend, design, and product development at Target during those heady days of change. She has since left the company to start her own consulting firm, RW Trend, and recently came out with a book, The Trendmaster's Guide: Get a Jump on What Your Customer Wants Next (Penguin, 2005). Waters recently spoke about the importance of design, Target, and trends with BusinessWeek Online reporter Pallavi Gogoi. Here are edited excerpts of their conversation.

You worked at Target during its crucial transformation into a design powerhouse. How was the decision made to adopt design?

Our ads were always hip. When I came in to Target, 12 years ago, the merchandise was half as cool as the ads. We needed to differentiate ourselves from Wal-Mart, which was becoming very big. We didn't want to compete on price -- it wouldn't work. Target was at a crossroads, deciding whether it would be a regional discounter or if it would go national.

Top management decided on a strategy of growth based on a three-legged stool -- to be trend-right, to be completely customer-focused, and finally to be design-driven. Everybody was on board -- the chairman, the president.

We soon developed a healthy respect for what design could do for the bottom line. We had started to see what the iMac computer did to Apple's stock or the [impact of] Volkswagen's redesign of the Beetle. Everyone at Target heartily and unanimously accepted that design can drive business growth.

Once that decision was made, what were the barriers to implementing it?

The struggle was mostly cultural. The in-house buyers -- for many years literally ran their own business with multimillion-dollar departments. They would work directly with vendors in Asia, look at samples, choose fabrics, and even go into details like necklines and hems on shirts and dresses. So, they literally made the decisions on what designs we would carry. When the focus changed to designers, the buyers had to change how they worked.

Was it difficult?

Some people were very open and wanted to do things a new way, and some felt they were losing control. Of course I think in reality they were still in control, just not driving the design aspect. But during the transition period, the executive team was focused and clear and made sure the people understood the corporate vision. I mean, either you're on the train leaving the station or you're not on the train.

What was Target's first big designer brand?

The first true designer was Michael Graves, which happened because Target worked with him on the Washington monument (Graves partnered with Target to design the scaffolding during the renovation of the Washington monument in 1997). Of course, after that we had Mossimo, Cynthia Rowley, Isaac Mizrahi.

We recently talked with Michael Graves (see BW Online, 8/18/05, "Michael Graves: Beyond Kettles") about his work with Target. Was that partnership typical?

With Michael Graves, it was a lot about the image initially, and creating buzz factor was important. We handled the brand with TLC -- the dollars spent on marketing outweighed the revenues initially. Of course, Graves' own vision shaped his relationship with Target, and soon he had designed housewares, garden and office supplies, and toys and games.

Mossimo, for instance, was a unique opportunity. He had financial problems, had overexpanded, and was already approaching other big chains to buy his company. When we approached him, his initial reaction was: I don't do discount. But after some talk, there was agreement. Target does not want to dumb a brand down. We stay true to it, and he thought it would be a good way to have exposure nationally.

What other brands have captured the concept of design for business?

P&G, Apple. Coach is one of my favorite examples of a great brand. The name always stood for quality. But now it's a design powerhouse, leveraging design in a forward-thinking and innovative way that's reflected by its phenomenal sales every quarter.

Any businesses that haven't figured it out?

Sony has stumbled and struggled.

What are the trends today?

Finding luxury in everyday basic goods is a big trend. To do that, companies are leveraging design to turn everyday products into unique and special experiences. Whirlpool's latest washers and dryers are a good example. Combining beauty and functionality, they sold at three times the price of the ones in the market.

So, what are tomorrow trends?

Mass customization is the next big wave. The Coldstone Creamery ice cream chain is a great example. You can make your own flavor of ice cream by choosing candy or other topping that the server will mix in right there on a cold marble slab. Or the Mini Cooper, which offers customization online.

Before it's here, it's on the Bloomberg Terminal.