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Target's Security Woes Bring Competitive Smiles To Wal-Mart And Costco In 2014
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Target's Security Woes Bring Competitive Smiles To Wal-Mart And Costco In 2014

Dec 28 2013, 7:00pm CST | by

As Target continues to deal with a credit and debit card hacking conspiracy that comprised over 40 million accounts, one can only wonder just how much the Target brand and market share will take a...

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30 weeks ago

Target's Security Woes Bring Competitive Smiles To Wal-Mart And Costco In 2014

Dec 28 2013, 7:00pm CST | by

As Target continues to deal with a credit and debit card hacking conspiracy that comprised over 40 million accounts, one can only wonder just how much the Target brand and market share will take a hit in 2014 to competitors such as Wal-Mart, Costco, and Kmart.

Looking at the financials, the most recently reported information has Target’s revenues at $73 billion.  Comparatively, Wal-Mart is at $469 billion, Costco is at $97 billion, and Kmart lags far behind at $15.5 billion (as reported in 2010).

But because most major cities have viable discount store alternatives to choose from within a reasonable driving distance, this debit/credit card compromise is likely to cause Target to lose anywhere from 2-10 percentage points in market share.

Consumers are still slowly rebounding from America’s worst recession since the Great Depression, and even though recent data on consumer spending was positive, it does not change the fact that consumers need to feel security and trust that their personal banking and card information will not be compromised.  It is hard to imagine how a fair percentage of Target shoppers could not have their confidence and trust with Target severely compromised after the events of recent weeks.

As a by-product, one would have to assume that all four of these companies will reinforce their efforts to ensure greater security and protection of private consumer data.  Unfortunately for Target, these efforts may be a day late and millions of dollars short as their competitors cash in on Target’s misfortune.

Strategically, it will be interesting to see if these other firms explicitly play upon consumers’ fears by re-emphasizing in upcoming advertisements their efforts to ensure consumer security.  In essence, basically rubbing salt into Target’s security wounds.

This fiasco won’t break Target, but expect that the financial gap between Target and Wal-Mart and Costco specifically will only widen in 2014 as past/current Target shoppers begin to question their own brand loyalty while new would-be Target customers think long and hard about engaging in transactions with the company in light of recent events.

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Patrick is an Economics Professor at the George Herbert Walker School of Business and Technology at Webster University in St Louis, MO, and the Founder/Director of Sportsimpacts.  Follow him on Twitter.

Source: Forbes Business

 
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