It was the largest breach of data in the retail market. Target’s data was breached leaving over 70 million customers scrabbling to protect their personal data including their name, address, phone number and e-mail address. And according to USA Today, many of those customers have stopped shopping at Target.
Although Target was one of several retail stores, including Starbucks and Neiman Marcus, who also had security breaches around the same shopping season, Target’s breach was the most well-publicized. Now, according to Target, their customer traffic has declined for both online and in store sales to its lowest point in three years. According to Kantar Retail, today 33% of U.S. households shopped at Target in January, compared with 43% in January 2013.
Gen Xers decrease shopping at target
Unfortunately, much of the drop in sales have come from Target’s “core customers”- the Gen Xers. This group, which is defined as those 32 to 39, declined 38% from 53% last year. Other groups who also have decreased their shopping at target include low income shoppers, which declined to 30%.
While sales are expected to decline significantly following the holidays, experts who track the retail markets confirm that Target’s decline is much more significant than other retail stores. How bad are the financials? Target has not yet offered a public statement but the fourth-quarter earnings report which were issued last week verify what has been reported. Net income fell 46% to $520 million from $961 million in 2012, and sales were down 5.3%.
Why have Target shoppers pulled back?
Despite Target’s efforts to shore up their systems and remove any doubts about the security of shopping at their store, there are still some shoppers who are leery. Dedicated shoppers were the most likely to be a victim of fraud and may be the most unwilling to go back to the store. Those who have returned have also admitted they generally use cash.
So what does Target have to do to heal the breach and bring its shoppers back? Target has already taken some significant steps. Not only did they cover all the fraudulent charges, they also provided free security monitoring for affected customers for a year and offered a 10% discount on purchases. The CEO has also noted that they are not done working to gain the confidence of their guests.
Target Shoppers still angry
What doesn’t make sense is that so many shoppers remain so angry at Target and their failure to protect their data, especially given the prevalence of data breaches within the retail market.
The good news is that experts predict that while the data breach may affect Target’s bottom line in the short run; long term it’s unlikely to have a detrimental effect. In fact, it could make Target one of the safest places to shop.
Brian Yarbrough, a research analyst with Edward Jones.”Probably 5% to 10% of customers will never shop there again,” he says. “It’s just the nature of the beast. But in this day and age, customers have slowly become immune to the breach.”
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