The Target Corporation has long prided itself on its “Expect More, Pay Less” branding strategy, promising quality of products and service at a value. Unfortunately Target, nor its customers, expected to uncover a massive data breach in December 2013, compromising the personal and financial information of an estimated 110 million customers.
Since the breach, Target has been working diligently to regain the trust of consumers, but some wonder if Target will be able to bounce back after this massive blow. In attempt to replenish consumer confidence, Target offered a 10% store-wide discount for the weekend following the announced breach, as well as offered one year of free credit monitoring for all consumers affected. Still, many consumers and investors were not impressed. Despite the best efforts of Target to control the damage, Target stock dropped from $65 to a low point of $47. As consumers scrambled, so did investors.
While retail competitors may be boasting of their relative safety compared to Target, the reality of the breach is that Target seems to be the victim of bad fortune. The circumstances that made the breach possible are not unique to Target, rather any retailer is a potential “target” of hackers. In fact, since 2007, TJ Maxx, JC Penney’s, Michaels, and Neiman Marcus have all experienced similar breaches. Many financial experts believe that the U.S. is particularly susceptible to hackers because of outdated credit technology. Over 50 countries operate on a computer chip based credit technology known as EMV, which creates a unique code for every transaction that cannot be duplicated by hackers. While EMV is not foolproof, its implementation has greatly reduced credit card fraud in Great Britain and Canada. The U.S. does have the intention of switching but has been slow to implement EMV because of high costs in replacing credit cards and scanning technology. Currently, the U.S., as a whole, is scheduled to switch over to EMV technology in 2015, but with the surge of data thefts, that may be too late. Target got the message. This month, Target announced the allocation of 100 million dollars to invest in early implementation of EMV technology. Target realized that in order to replenish consumer confidence, they needed to be confident themselves.
So, what can other businesses learn from this? Well, the Chinese word for crisis stems from two characters. One character stands for danger, the other for opportunity. This massive breach could have just been a huge blemish to the reputation of Target, but the retailer chose to utilize the opportunity to help the nation transcend into a movement for safer financial policies for U.S. retailers and consumers alike. This new movement also presents an opportunity to small businesses. By prioritizing security and privacy and communicating this to consumers, businesses can effectively differentiate their identity and services from that of their competitors.
Sources
Sidel, Robin. “Target Hit by Credit-Card Breach.” 19 Dec 2013. Wall Steet Journal. 27 Feb 2014.
Wallace, Gregory. “Target credit card hack: What you need to know.” 23 Dec 2013. CNN. 27 Feb 2014.
