Consumers may forgive, but they will not forget. Unfortunately in Target’s case, shoppers are slow to even muster up that forgiveness. With its holiday data breach impacting every level of Target’s organization, one must look to the most important piece of the equation – customers – to assess the ongoing damage and pinpoint what’s working for the retailer versus what’s not. For this new analysis on the current state of the former discount darling, we’re examining the point of view from one very influential group of shoppers, women.
Data Breach: The Ongoing Damage
The good news here for Target is that shopper confidence is improving. In May, 47.5% of females overall indicated that they were somewhat or very confident in their personal and financial security when making purchases at Target specifically, rising from February’s low of 40.5%. The downside here, of course, is the fact that fewer than half feel secure in purchasing at Target. Compare that to the 75.0% who express confidence in the Amazon.com checkout or even the 60.8% who sense security when paying at Walmart, and Target’s 47.5% is still pretty meager. Adding insult to injury, our Shopper Security Score measure of shopper confidence continues to rank Target at the lowest position of the security hierarchy, significantly lagging primary competitors Amazon, Walmart, Best Buy, Kohl’s, Macy’s, and JC Penney, respectively.
Takeaway: Target continues to have a tough row to hoe when it comes to winning back the trust of its shoppers. And with consumers increasingly gravitating online for purchases, this presents a twofold threat for Target: 1. With online shopping presenting customers with seemingly limitless sources for purchasing, already tenuous shoppers have fewer reasons to align their loyalty with Target; 2. As plastic is preferred method for virtual purchases, Target may have a harder time regaining the trust of digital consumers who worry about keeping their banking information private.
What’s Working For Target
On the plus side for Target, the discounter has managed to grow its female shopper base in two key areas, groceries as well as health and beauty aids (HBA) in the months following the data breach. It’s a seemingly difficult feat for a retailer mired in turmoil; however, these are categories that may to be harder for shoppers to quit. Low prices, one-stop shopping convenience, and multitudes of locations still play in Target’s favor and appeal to budget-conscious, time-starved shoppers. Additionally, with consumers slower to move to digital delivery of perishables, soaps, and shampoos compared to other categories (such as apparel or electronics), shopping for these items in Target stores allows customers more options for alternative methods of payment if they are uncomfortable swiping a credit or debit card.
To Target’s detriment though, the cross-shopping habits of Target’s grocery and HBA females are limited. That is, they aren’t as likely to check out other areas of the store when they visit Target for their eggs and vitamins. For generally higher margin categories such as women’s and men’s apparel as well as shoes and electronics, these shoppers show significantly more preference for retailers like Kohl’s, Macy’s, DSW, and Best Buy, equating to potential spending dollars headed right out of Target stores.
Takeaway: While Target has managed to grow its female customer base in groceries and HBA, the discounter’s challenge going forward will be to: 1. Maintain this growth in the face of stiff price competition from competitors like Walmart, Kroger, CVS, and Walgreens; and 2. Captivate the interest of these shoppers in other areas of the store.
Where Target Went Off-Target
As encouraging as the female shoppers stats are in grocery and HBA, Target’s position in apparel give the retailer cause for alarm. Among female shoppers over the same time period (December 2013 to May 2014), customer preference share for Target dropped 32% and 25% for women’s and men’s clothing, respectively.
Examination of Target apparel shoppers (females who shop at Target for women’s and/or men’s apparel) then and now reveals an interesting shift in core demographics of this group. As of May, more than half (50.6%) of these shoppers were under the age of 35, compared to 42.4% back in December. As may be expected with their more youthful average age, Target apparel shoppers are now 60% more likely to be single and nearly 40% less likely to have children in the household than they were at the end of 2013. So while, yes, Target has managed to hold onto those desirable Millennial customers, their apparel shoppers are not only fewer in number overall, but are also more likely to be buying for fewer people in their households.
Another notable shift: nearly one out of three (30.4%) current Target apparel shoppers doesn’t have a credit card, representing a rise of more than 25% from December. This can likely be attributed to the data breach, where credit card users may have switched from Target to another store, but the impact to Target is significant, as current apparel shoppers are literally restricted to the cash they have on hand when at the store.
Takeaway: The Target drain in apparel is not only reducing Target’s potential volume of customers, but it’s also leading to a key shift in the demographic makeup of these shoppers: they are younger, buying for fewer people, and are more likely to limit themselves to the cash they have on hand when at the point of purchase. And let’s not forget one of the hallmarks of Millennial consumers: loyalty is fleeting.
The Bottom Line
Target continues to face significant threats to their customer base as the fallout from the holiday data breach continues to impact shoppers. This presents a prime opportunity for competing retailers to strike, but if Target can hone in and capitalize on its opportunities, the discounter may be able to eventually hit the bull’s-eye with shoppers.
This article originally appeared on Forbes.com.