Data Breach? Who Cares! Shoppers Still Flock to Target

A series of major stumbles may have spooked investors, but Target is as popular as ever with shoppers.

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Last year, Target (TGT) fumbled its entry into Canada. Then, a data breach torpedoed its Christmas shopping season sales. (Maybe you heard of it?) Then it lost its CEO.

It's been a litany of despair for Target shareholders, as the stock shed 13 percent over the past six months. It didn't begin or end with the revelation that hackers had broken into Target computers and stolen 40 million debit and credit card numbers. (In fact, Target shares have been trending downwards for nearly a year). But here's the good news: The breach doesn't seem to have affected Target's popularity with its customers one bit.

Target Can't Be Knocked Down

That's the surprising conclusion of a poll just recently released by Bloomberg, which concluded that none of the bad news that has frightened off Target investors has had much of an impact on Target customers.

To the contrary, according to Bloomberg's national poll, conducted May 8-11, only about 7 percent of Target customers say they're likely to spend less at Target over the next year than they did in the previous year. Meanwhile, 85 percent say they expect to shop about as much at Target this year as they did last year. And 7 percent -- a number equal to those who say they'll spend less -- told Bloomberg that they are inclined to spend more at Target this year than they did last year.

These shoppers appear to be backing up their words with actions. In Target's most recent earnings report, released in May, it was confirmed that despite the data breach, and despite the CEO's exit, Target's quarterly revenues climbed 2 percent in comparison to the previous year's quarter.

If these numbers didn't sound strange enough already, you'd better sit down for this next bit. According to Bloomberg's poll, only "about half" of Target customers say they are confident that the company "will be able to keep credit and debit-card information safe from here on in."

So apparently, customers are fully aware of the data breach. They realize that Target now has the reputation of being a personally-identifiable information butterfingers. And they don't care.

A New Fact of Life

What might explain consumers' indifference to Target's apparent inability to keep their confidential financial information under lock and key? The answer might be as simple as Americans' indefatigable need to shop -- and the plain, hard truth that in modern America, no retailer seems safe from hacking.

Case in point: In drawing up its report on consumers' seemingly inexplicable lack of fear about shopping at Target, Bloomberg included a colorful graphic describing how, at the time, Target's breach was believed to be the fourth largest such data theft in history. (The other three, if you're curious, included the October 2013 breach at Court Ventures, the 2009 credit card data heist at Heartland Payment Systems, and the loss later that year of financial information on 76 million U.S. veterans.)

Yet even as Bloomberg was conducting its poll, employees at eBay (EBAY) were discovering evidence of the biggest breach in history, with an estimated 233 million potential victims. The online auctioneer didn't admit to its breach until May 21, which was the same day Target reported its earnings. But already, it seems shoppers knew the score: If all retailers are equally vulnerable to data breaches, then they're also all equally safe.

When you get right down to it, shoppers' decision not to "blame the victim" at Target, may not be so illogical after all.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends and also owns shares of eBay. You can try any of our newsletter services free for 30 days.


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