In the Amazon Era, Why Target Can’t Afford to Have Another Massive Tech Issue
When it comes to technical glitches, Target Corp. couldn’t catch a break over the weekend.
Scores of the chain’s shoppers took to social media on Saturday to bemoan a two-hour long cash register outage that hit stores nationwide — preventing customers from completing transactions in Target’s physical locations for that short period of time and costing the retailer several millions in sales, according to several expert tallies. Less than 24 hours later, on Sunday, a smaller number of its outposts were hit with a data-processing issue that meant those locations were unable to accept credit cards for about 90 minutes.
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Target — which logged total sales of $74.4 billion in fiscal year 2018 — is only a few years removed from a historic data breach that affected over 40 million consumers during the 2013 holiday season and resulted in an $18.5 million company payout to shoppers in 2017. While it confirmed that this past weekend’s events did not constitute a data breach — and that “no guest information was compromised at any time” — some experts say the company should be mindful of the compounding impact of a series of high-profile tech hiccups.
“[This kind of thing] happens every day and all the time, but unless there’s a situation such as Target where a lot of people become aware at the same moment that there’s a technology glitch, there’s not so much of an outcry,” explained Kristina Podnar, a digital policy consultant, when asked about Target’s weekend cash register snafu. “It is not so much of a big deal for Target’s system to be down for an hour or two but it really is a big deal on [heavy shopping days such as] Saturday and Sunday — [and this] is an ongoing issue from the brand perspective. It [degrades] the Target brand.”
For what it’s worth, Target has enjoyed multiple quarters of sales gains since its headline-making data breach six years ago. Meanwhile, its omnichannel strategy — which includes being a pioneer of buy online and pick up in store — has been widely lauded by experts as both effective and worth replicating across retail. Last February, for example, Target became the first nationwide retailer to offer same-day delivery in major metropolitan cities following its acquisition of grocery delivery service Shipt.
As far as brand reputation and consumer affinity, that’s also remained fairly solid, too — even growing over the years.
“Target comes from a place where they have a very strong brand to start with — there’s a strong loyalty among consumers [as well as an] affinity for the brand,” said Deb Gabor, CEO of Sol Marketing. “So when something like this happens, it enables people to forgive them.”
She added, “We’re willing to give them a chance, and we give them a pass [in spite of] the threat of the data breach a few years ago because they offer something above and beyond and that far outweighs the risk on the [data] side.”
Still, as the retailer — with 1,800 stores and 350,000-plus employees worldwide — moves to take a bigger slice of the e-commerce pie and become a formidable digital competitor against Amazon and Walmart, Podnar believes how it handles its latest glitch is critical.
“Someone in management at Target [has to say] ‘This is not just about a 90-minute one-day outage because [a third-party vendor] did something wonky because of technology — this is a bigger issue [for]our brand,’” Podnar said. “Not only is Target trying to keep itself playing in this physical field, but they’re trying to go up against Amazon and do one-day delivery. If they want to compete with the big guys, they have to step it up because they can’t have this kind of thing happening, and they can’t [risk] the brand degradation that it brings.” (It’s worth noting that Amazon has had its own share of technical glitches, which can sometimes prove tough to avoid in the digital realm, Podnar noted.)
While Gabor said she sees this weekend’s issues blowing over quickly among consumers, she, too, agrees that Target’s next tech move has to be its best move.
“Target, from a brand perspective, is not on the precipice of one foot in the grave and the other one on the banana peel. But if they continue to have issues and technology becomes of a greater concern to more people, that can put the brand at risk,” Gabor noted.
For their part, it seems Target investors were also grappling with some lingering concerns from over the weekend. The retailer’s stock spent all of Monday in the red — slipping as much as 2% and ending the trading day down less than 1% to $87.14.
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