Report: Target’s customer traffic hurt by data breach

It should come as no surprise that Target’s sales were hit by the December data breach that affected millions. But the number of people visiting its stores and Web site fell to the lowest level in three years, according to a recent report.

Only 33 percent of U.S. households shopped at Target in January, a decrease of 22 percent from the same time last year, according to a survey by Kantar Retail, a consulting group. The shoppers who stayed away the most included Gen Xers — its core demographic — and lower-income, infrequent shoppers, who visit the store less but make up a large part of its customer base.

But though the data breach may have spooked Target customers in the short term, the traffic decline is part of a long-term trend, said Amy Koo, senior analyst at Kantar Retail and a co-author of the report.

Since the recession, Target has focused on serving its most-loyal customers, Koo said, sometimes at the expense of the lower-income customer base. Target’s partnerships with luxury brands and designers, such as the Target + Neiman Marcus holiday collection, were a reflection of that effort, she said.

“But over the last year, they’ve realized that that’s not enough,” Koo said.

Since then, Target has tried to convert its occasional visitors into loyal shoppers, she said.

The data breach threw a wrench into those plans.

Target’s core shoppers, such as its RED card holders, were more likely to be affected by the breach. Like most shoppers, they are being more careful about their purchases, using cash and monitoring their credit card statements closely, the report said. But they will ultimately stand by the company, according to Koo. Those who shop at Target less frequently, however, have been scared away.

“The ‘guests’ they have been trying to reach the most were the least loyal,” said Koo.

Visits by lower-income shoppers, defined as those who make below $35,000 per year, decreased by 30 percent from last year, the report said. Visits by shoppers between the ages of 32 and 49 declined by 28 percent from the previous year.

“Target failed to reach a December bump in penetration of the same magnitude as it has enjoyed in recent years,” said Rachel McGuire, another co-author of the report.

In its last earnings report, Target said the data breach cost the company $17 million. Analysts expect more expenses over the years as part of the fallout from the breach. Last week, the retailer’s chief information officer stepped down as a result of the breach.

Target did not comment on the specific findings of the report.

Amrita Jayakumar covers federal government contracting for Capital Business, The Post's local business publication.
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