News broke yesterday that Target CEO Gregg Steinhafel has stepped down from his post, the immediate cause for which appears to be the massive data breach that rocked Target — and the whole retail sector — last winter.
An official statement from Target specifically noted that Steinhafel had "held himself personally accountable" for the breach, which compromised the personal data of millions of shoppers who used their credit cards in Target's brick-and-mortar stores during the busy holiday season. But despite Steinhafel personally taking the blame, is his exit enough for Target to win back the trust of consumers?
The company took a hit not only for the breach, but for concealing it and its scope for weeks. Furthermore, a Senate investigation found the company negligent in ignoring early warning signs of the breach, and not securing their system enough. After the event, Target offered free credit tracking to all recent customers and a 10% in-store discount, but their sales still sunk 2.5% the following quarter. According to a DealNews poll, 82% of respondents said the discount wasn't enough.
However, observers are saying the data breach was just the final straw for Steinhafel. Under his tenure, Target also had lagging American sales and an unsuccessful expansion into Canada.
Do Shoppers Care if a CEO Steps Down?
Other recent executive departures suggest that having a CEO step down when the company faces controversy can go a long way to appease angry consumers. Lululemon founder and Chairman of the Board Chip Wilson resigned after making offensive comments about female customers who were concerned about the defective see-through yoga pants the company produced. And Abercrombie and Fitch CEO Michael Jeffries was stripped of his Chairman title after a similar controversy over comments about their target demographic.
Board members are more concerned with profit margins, but an executive's ousting could symbolically signal to consumers that the brand has reformed and changed. What do you think, reader? Are you more confident shopping at Target with Steinhafel gone? Let us know in the comments below.