Steinhafel’s resignation is a key step toward restoring trust.
The first Target stores opened in Minnesota in 1962, fulfilling the bold vision of the Dayton brothers to create a discount retail operation that would complement their company’s successful department stores.
It was seen as a risky experiment at the time, but thankfully for this state the Daytons knew what they were doing. As shopping habits changed and department stores struggled, Target was well on its way to becoming one of the nation’s largest discount chains.
Today Target is the second-largest publicly held company based in Minnesota, with $72.6 billion in annual revenues and 366,000 employees worldwide. It’s also one of the largest employers in the state and in downtown Minneapolis, and it gives back $4 million a week through the corporate giving program started by the Dayton family.
Minnesota depends on Target for more than shampoo and toothpaste. The company is among the 19 Fortune 500 headquarters companies that drive the state’s economy. Minnesota, and especially the Twin Cities, needs a healthy Target — and that starts with strong leadership.
Despite his long tenure, Steinhafel remains an enigmatic figure locally, in part because he rarely made himself available to the news media. His judgment was questioned on this page and elsewhere in 2010, when Target gave $150,000 to a group supporting then-GOP gubernatorial candidate and gay-marriage opponent Tom Emmer. (The company eventually apologized, reaffirmed its commitment to gay rights and changed its political contributions policy.)
But it was events of the past year — declining revenues, lower-than-expected profits, poor results in Canada and one of the largest data breaches in U.S. history — that shook investor and consumer confidence in the retailer and its leadership. Credit the company’s board for taking this critical step to rebuild that trust.
Ensuring that customer data is secure is the obvious initial priority for Target’s next CEO. The United States has one of the least secure card purchasing systems in the world because of its reliance on cards with magnetic strips. Many nations now use cards with computer chips, which are more difficult for criminals to turn into working replicas.
According to the Nilson Report, an industry publication, the United States accounts for about 50 percent of the world’s card fraud, while generating only about 25 percent of its card payment transactions.
The United States has lagged because shifting to the new chipped cards and the necessary point-of-purchase equipment would require a massive investment.
Target announced last month that it was accelerating its $100 million plan to use the more secure chip-based payment technology, which its U.S. stores should be able to accept for payment in early 2015. The company also continues to work with MasterCard to make its Target-branded credit and debit cards more secure.
The nation’s third-largest retailer has long emphasized superior customer service in its hard-fought battle with other big-box retailers. Enhanced data security will help rebuild consumer and investor trust and give the company a competitive edge.
Target actually began pursuing improved technology during the last decade, but backed off when other retailers didn’t go along with the costly transition. Now the company can play a key leadership role by following through on the $100 million conversion and convincing consumers and other businesses that the nation can’t afford not to use better technology.
In the spirit of the visionary Daytons, the company’s next CEO must lead the way from here.
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