Learning from three discount giants - Taking Stock - Column

Discount Store News, Jan 4, 1993 by Arthur Markowitz

Three men who were retailing giants died last year, three decades after they took their initial small steps into discount retailing.

The eventual achievements of John Geisse, Samuel Walton and Harry Cunningham are paradigms of the challenges facing a growing number of business leaders in today's complex economic environment, and the success that these executives hope awaits them.

While different business needs and forces drove Geisse and Cunningham, their accomplishments were similar: identifying new business opportunities and leading established companies into new - and successful - endeavors.

Geisse guided two thriving traditional department store chains, first Dayton (now Dayton-Hudson) and then May Department Stores, into what these companies viewed as an alien retailing business - discounting. He helped to found Target for the former and launched Venture for the latter. Early on, Geisse recognized the opportunities awaiting an upscale discount store and led Dayton, a small regional department store chain, into starting Target. That move was the beginning of Dayton's evolution into Dayton-Hudson, the parent of the nation's third largest discount chain. He then inaugurated Venture for May Department Stores when that regional retailer saw the need for its own discount chain to battle the growing discount challenge and retain market share.

Cunningham also recognized the potential of a discount store chain and piloted S.S. Kresge, a moribund retailer that was hanging on as the nation's second largest variety store company, into a new merchandising endeavor, Kmart. That move turned out to be the imprimatur for the then budding discount store industry and resulted in Kmart rapidly becoming the nation's largest discounter (a title it relinquished to Wal-Mart in 1990) and one of the nation's three largest retailers.

While Walton also recognized the impact discounting was making on the American retailing scene, the driving force behind his achievement was the idea of launching a new company to provide the benefits of this merchandising to consumers in small, rural communities - often just county seats with no more than a main street - eschewed by the rapidly growing chains that focused on metro and neighboring suburban markets. His entrepreneurship and leadership resulted in his accomplishment, the unique application of the discount store concept, in the process growing Wal-Mart, a small unheralded retailing business, into the nation's premier merchant.

A host of business executives and businesses today are now confronting the challenge of recognizing new opportunities and either re-directing a company that Geisse and Cunningham faced or starting up a venture that devised new applications, as Walton did. The question of whether these leaders comprehend new opportunities and, if needed, envision new directions for their companies, remains the paramount item on every business' agenda.

IBM, General Motors and defense industry monoliths like General Dynamics are examples of companies where the need for new direction is evident. If changes are made at such businesses, will they be as successful as Kmart, Target, or Venture, the remaking of R.J. Reynolds into the diversified consumer products RJR Nabisco, AT&T into a communication or computer and financial services business or General Electric into an industrial, information and financial services conglomerate?

Apple Computer, the host of biotechnology companies using genetic engineering to design new drugs, cable TV giants like CNN and Tele-Communciations Inc. and The Price Co.'s Price Club are examples of start-ups that recognized new opportunites and developed unique applications. Start-up ventures continue to sprout in the computer hardware and software and information fields. If executives of these businesses provide the entrepreneurship, leadership and imagination that Walton did for his company, then Wal-Mart will be the template for their success. If not, then these start-ups will join the ranks of Korvettes, Woolco, Kaiser Auto, Teleaction, Video Shoppers Mall, Kaypro, Sinclair and Peoples Express.