Comprehensive New Study Focuses on Consumer Reaction to Data Breaches
September 16, 2014
The Home Depot Data Breach: Lessons from Target
Last week’s revelations about a potentially sweeping credit and debit card data beach at The Home Depot raises new questions about the extent to which these events turn consumers away from impacted stores. In fact, Target saw its first quarter sales drop 16% over last year following the well-publicized Target data breach in November 2013.
A new analysis based on actual credit card spending patterns by Lightspeed Financial Services Group (FSG) shows that close to one-quarter of credit card accounts with purchases at Target before the data breach had fewer purchases — and in some cases, no purchases after the breach was announced. This analysis is based on Lightspeed FSG’s nationwide credit card behavioral tracking panel, which monitors consumer card use and spend on a continuous basis.
Lightspeed FSG’s analysis compared credit card purchases at Target in the four months preceding the data breach announcement (September to December 2013) to the four months following (January to April 2014), finding that:
- About 6% of credit card accounts used at Target in late 2013 had more than two purchases in the four months preceding the Target data breach, but absolutely none in the subsequent four months.
- Another 18% of accounts used at Target in late 2013 were still used at Target after the data breach, but only about half as often.
- Yet there were some credit card accounts that showed no decline in Target spending — about 37% of accounts were used at the same rate or more often than before the data breach.
The 6% of accounts that were being actively used at Target but had no purchases after the data breach averaged just over one purchase a month in late 2013, with approximately $40 per trip, according to the Lightspeed FSG credit card tracking data.
The 18% of accounts with a sharp decline in Target purchases had an average of 7.8 purchases in the four month period before the breach, but only 4.4 purchases in the four-month period following the incident.
What does this mean for The Home Depot in the wake of last week’s announcement?
To measure customer reaction to the data breach incidents at The Home Depot, Target, and Neiman Marcus, Lightspeed FSG is launching a new study this week focusing on how consumers are reacting to news of the events and who they blame for the incidents.
For more information on this new study, contact Greg Flemming, Senior Vice President of Lightspeed Financial Services Group, at email@example.com.