Retail giant Target has a very clever slogan “Expect More Pay Less.” What customers did not expect was seeing a vast number of their credit card and personal information lifted from the retailer’s security system. In light of this most highly publicized security breach and other financial missteps, it has been announced on Monday that Target’s President and CEO Greg Steinhafel will now steps down from his post.
Back during the height of last year’s holiday shopping season, as many as a reported 40 million unknowing Target shoppers had highly sensitive credit and debit card numbers unlawfully hacked by criminals. In addition, hackers allegedly also had access to the personal information to another 70 million Target shoppers.
The big question many are asking in light of Monday’s news of CEO Steinhafel’s announced departure, is why had it taken six months since this highly embarrassing and very detrimental security breach for Steinhafel to step down? According to reports, Steinhafel’s departure goes beyond just the security breach. For some time now, Target has been missing the mark as a brand identified with affordable quality merchandise. Target’s board of directors have not been pleased with the retail outlet’s financial performance particularly in light of its recent efforts to branch out into international territories with a dismal launch in Canada.
On a promise to deliver affordable quality to the people of Canada, what Target delivered according to reports were 124 brand new stores north of the border with little background done on the shopping habits of Canadian citizens. Canadian Target shoppers found their stores overpriced and with a number of out of stock items. Target struggled to connect with the culture of Canadian shoppers who like to seek value for their money and are more apt to shop at places like Costco and WalMart. The failed expansion into Canada came at a price. The company reportedly lost a reported $329 million in its fourth quarter and an annual loss of $941 million. The company has also been slow on implementing a solid grocery component to their stores to rival their main competitor WalMart.
With all fingers pointed squarely at Steinhafel, Target’s board of directors have concluded that it is time for a turnaround in strategy and leadership in the company. Greg Steinhafel had spent 35 years at Target and the past six as its CEO. Until a new CEO is identified, reports state Chief Financial Officer John Mulligan will serve as interim President and CEO. Steinhafel will serve as an advisor during the transitional shift of power and is reportedly due a severance package as part of his departure. In another house cleaning move, Target has hired a new Chief Information Officer after its former CIO Beth Jacob left her post two months earlier.
Those with an eye on business say Target has a lot of work to do in light of its security breach and its fiscal failings. With their sights set on a new CEO, those on inner walls of the retailer say it will come down to the company doing what needs to be done to regain consumer confidence and refocus their strategy in Canada. Target executives believe it is the only way to once again hit their financial bullseye and repair past damages.
By Hal Banfield