Target Faces Tough Sledding After Data Theft
After admitting yesterday that it had stemmed a security breach that may have resulted in the pilfering of 40 million customers’ credit and debit card information, Target began what promises to be a tough and protracted sell in restoring customer confidence just as shoppers gear up for the final weekend of Christmas shopping.
“This is close to the worst time to have it happen,” Jeremy Robinson-Leon, a principal at corporate and crisis public relations firm Group Gordon, tells the Associated Press. “I think I would be much more likely to go to a competitor over the next few days, rather than risk the potential to have my information be compromised.”
Security blogger Brian Krebs broke the gist of the story Wednesday but Target “did not respond to multiple requests for comment” before releasing a statement Thursday morning confirming “it is aware of unauthorized access to payment card data that may have impacted certain guests making credit and debit card purchases in its U.S. stores.”
“Target was thrust into crisis mode,” write Sara Germano, Robin Sidel and Danny Yadron in the Wall Street Journal. They report it “discovered the problem Sunday, brought in the Secret Service and alerted card companies. Target also hired a forensics unit at Verizon Communications Inc. to investigate the incident, according to people familiar with the matter.”
Meanwhile, “anxious customers clogged the chain store’s phone lines, jammed its credit-card website, and left angry posts on the corporate Facebook page,” they report.
One representative post, according to Reuters’ Jim Finkle and Dhanya Skariachan, said: “Thank you Target for nearly costing me and my wife our identities, we will never shop or purchase anything in your store again.” Another wisecracked: “Shop at Target, become a target. Gee, thanks.”
The reaction of customers who registered their concern on Twitter (@Target) was a mixed bag, according to the Los Angeles Times’ Stuart Pfeifer, but, collectively, they indicate “Target has quite a public relations fiasco on its hands.”
Reports Pfeifer: “Several wondered what they should do to protect themselves. Some said they were immediately canceling all of their credit cards to avoid the potential for fraud. Others said they planned to stop shopping at Target.”
The AP’s Anne D’Innocenzio and Bree Fowler write: “The incident is particularly troublesome for Target because it has used its store-branded credit and debit cards as a marketing tool to attract shoppers with a 5% discount.”
“This is how Target is getting more customers in the stores,” according to Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. “It’s telling people to use the card. It’s been a big win. If they lose that trust, that person goes to Wal-Mart.”
“Target’s first priority is preserving the trust of our guests, and we have moved swiftly to address this issue, so guests can shop with confidence. We regret any inconvenience this may cause,” Target CEO Gregg Steinhafel said in the statement issued yesterday.
Glen Cameron, a University of Missouri journalism professor, tells the Kansas City Stars’ Mark Davis that Target faced competing pressures in deciding when to go public.
“There’s benefit, he said, in a company breaking the news to customers itself. It brings credibility and an air of competence or control over the situation,” Davis writes. “Speaking too soon, however, can lead to mistaken ‘facts’ that erode customer confidence.”
Bloomberg Businessweek’s Matt Townsend, Lindsey Rupp and Lauren Coleman-Lochner point out that Target had already cut its forecast for annual same-store sales growth to 1% from as much as 2.5% in August. They then tell the story of a mom who will have to tell her kids that a planned trip to visit relatives in Florida over the holidays will probably have to be canceled because of $500 in losses on her Target debit card that will take about two weeks to get back.
Joseph Feldman, senior retail analyst for Telsey Advisory Group, feels that security breaches have become commonplace and “tend to be quickly forgotten once affected shoppers have new cards in hand and unauthorized charges purged from their accounts,” reports CNBC’s Kelli Grant.
“I feel like most everybody has gotten a letter in the past five years that says, ‘There’s been a breach on your account,’” Feldman said.
The subhed in Target’s press released yesterday curtly informed us: “Issue has been identified and resolved.”
The repercussions and fallout, however, no doubt have not. The AP’s Matt Small tweeted the following at 5:23 this morning:
The tools of the reportorial legman, à la the New Orleans Times-Picayune’s Walt Philbin, have certainly proliferated from the days of pounding the concrete and working the phones, don’t I well know. Pity the poor corporate communicator on the other side of all that unsecured data, information and anecdote.