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[28 comments]

Consumer privacy concerns are overblown

May 27, 2014

Through a special arrangement, presented here for discussion is an excerpt of a current article from Commerce Anywhere Blog.

When you think about it, a butler and a stalker may be indistinguishable to an uninformed onlooker. The big difference is in their motivation; the butler is trying to make your life easier.

Consumers say they want better shopping experiences and their spending backs that up. Look at the growth of Amazon. How can Amazon be rated by consumers the number one customer service retailer while Nordstrom is number 10? Has anyone actually ever talked to an Amazon representative? Everything Amazon does is data-driven — data that is collected on its customers to improve the shopping experience.

Every click on the websites we shop is recorded. Every purchase using a credit card is stored. Every interaction with an ATM is videotaped. If you're carrying a mobile phone, you're on the grid. You're kidding yourself if you think otherwise.

I love these surveys that ask shoppers how they feel about tracking their purchases and movements in stores. Who's really going to say they want to be tracked? My privacy isn't something I give away for free if I can help it. People use credit cards even though all their purchases are tracked. They use loyalty cards too. They'll post all day on Facebook, Twitter, and Instagram and, in some cases, their location is tracked there as well. Why would they do that?

We trade privacy for benefits, quid pro quo. The convenience of my toll-tag outweighs the fact that my drives are recorded. Yeah, I suppose the team at Law and Order can subpoena those records and figure out where I was at the time of the crime, but I'd like to think it's more likely to provide an alibi than a conviction.

I'm all for limiting data sharing with third parties, and I support the "right to be forgotten." I'm concerned about identity theft, and I don't go around advertising my contact information. So I guess I do value my privacy — I just don't think a few beacons in my local stores are a big deal. And I like the result of stores having better assortments, lower prices, and providing offers that interest me.

Discussion Questions:

Do you agree that consumer privacy concerns are overstated? What are your biggest personal concerns regarding privacy? Can stores do a better job explaining the trade-off benefits?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that beacons and other store tracking technology will be fairly common and widely accepted inside stores within two to three years?

Comments:

The difference between butler and stalker isn't just intent...it's permission.

And reaction.

Serve me, and I'll be happy. But ask me first. Stalk me, and at best I'll tell you to get out of my face. Worst case, I'll contact the authorities.

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Paula Rosenblum, Managing Partner, RSR Research

No, as it's a personal decision. And if your identity has ever been borrowed, that's a huge hassle to deal with and it's clear retailers (e.g. Target, Michaels, Neiman Marcus, TJX, etc.) can't guarantee they can protect our personal information.

That being said, stores can do a much better job of explaining the trade-off benefits. Here's an example using Nordstrom, where clearly they could have done a much better job with their in-store customer communication.

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Bill Davis, Director, MB&G Consulting

I'm hard pressed to come up with a time when a company that tracks my behavior, other than Kroger, has ever offered me a benefit - they used to send me coupons for products I used. They don't anymore, which is why I shop at Publix now. Up until a year ago, Target would have told you that privacy concerns are overstated - now I think twice about shopping at Target and when I do, I pay cash.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

I think the issue of data privacy is a complex one that consumers/shoppers view in a couple of ways. The perception of Amazon is positive because they use your data to provide a better experience that we all acknowledge. Facebook and Google are less successful perception-wise because the data they collect helps sell advertising.

Carrying that through to brick/mortar retail, data collected should make for a better experience, but retail as a segment hasn't performed well in that regard, as noted by the distinction between Amazon and Nordstrom. It often isn't clear to what end you provide data about yourself.

A Chicago Tribune article recently noted "The customer experience at Sears and Kmart is basically horrific." For retail the challenge will only escalate as it gets easier to engage shoppers in real time on mobile devices. The ability to engage will outstrip the ability to do so effectively which in turn will make it harder to obtain consumer data in the first place. Consumers will tune out irrelevant or poorly timed communications just like they do today when they opt out of email lists.

Compounding the issue is the fact that retail and CPG alike often employ digital start-ups to execute these new form marketing programs directly or through their agencies. The data these businesses collect can sometimes be poorly secured or the company doesn't prioritize data security. Data breaches are then are more likely, just like what happened to Target recently, and the damage can be irreparable. The winning play seems to be to carefully test new forms of engagement, but to do so with an eye on improving the shopping experience while clearly communicating why consumer data is collected and how it will be used.

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Gib Bassett, Global Program Director for Consumer Goods, Teradata Corp.

Consumer privacy concerns are not overstated. In fact, if consumers knew how much data was being collected about them, those concerns would be highly understated. Part of that is the very real fear of identity theft, the other is fear of Big Brother. Retailers can mitigate some of the Big Brother fears by explaining the benefits of data collection. But retailers have exacerbated the fear of identity theft through shoddy data protection practices.

Consumers should have the right to say "enough" and protect their data, and be able to give information away when they deem it to be valuable, not just because a retailer wants to collect it and may or may not use it. Customer service should have little to do with data collection. And by the way, I have spoken with Amazon customer service reps and their service was excellent, without having to dig into my site surfing data.

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Max Goldberg, President, Max Goldberg & Associates

Consumer privacy concerns are only overstated to the degree that stores are irresponsible with the data they collect - which they generally are. Consumers are more than willing to opt-in and opt-up (e.g., via loyalty "programs") in exchange for the right consideration from brands.

Aside from the issue of stores under-delivering in terms of using data to deliver a better customer experience, there is increasing likelihood that regardless of consumer concerns being overstated, regulators will act to make sure that privacy isn't based on "responsible" use of data, but rather legal use of data, including disclosure and commitment to deliver on the appropriate consumer expectations.

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Phil Rubin, CEO, rDialogue

The retail industry has maintained for years that tracking customers helps them to provide better service, but real-life examples of this are mighty hard to find. As an industry, we don't just have a messaging problem; we also have a data-retention problem. The next big data breach (there will be a next big breach) will re-ignite consumer frustration with this.

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Cathy Hotka, Principal, Cathy Hotka & Associates

The concern is not overstated, but just like the frog in the pot of water that is heated gradually, the frog ends up being boiled to death. Privacy is something we are starting to miss as it keeps going away.

Problem is there's not much most of us can do about it and still live in the modern world. I am amazed at how much info I give up for the sake of some conveniences.

But I do look to use things that track me less. Example, my search engine is Duck Duck Go. Everyone gets the same results.

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Mel Kleiman, President, Humetrics

Until someone has had their identity stolen or overtly compromised, privacy concerns are an abstract concept. We've all entered the transparent world described in the article, perhaps not knowingly but here we are, nevertheless. Even the "right to be forgotten" seems unrealistic.

Given my own experience with identity fraud, I want to only deal with those companies that have a responsible and realistic policy. Banks and credit cards stand out in my mind as having a quick reaction time and the willingness to work with consumers. Outside of the financial services, i.e. retailers and other providers, I'd say it's a roll of the dice.

Case in point: my bank account was used to pay Time Warner Cable bills for several unknown parties. I contacted Time Warner and was asked my account number. I didn't have an account with them and so I had no account number. They refused to discuss the matter with me. It never made sense to me. My bank restored my account balance. But Time Warner was not interested in rectifying the problem for me or for them. Logic suggested that all they had to do was connect the dots between the payments from my accounts and the people whose Time Warner bills were paid with my money.

No one knows how my account was hacked. And no one knows who did it. No one (except me) cares. So I am grateful to the bank. As for my feelings for Time Warner Cable, I'm sure you can guess.

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Joan Treistman, President, The Treistman Group LLC

I am in step with Paula. It is about permission. Amazon, Google and Facebook know a lot about me. I know that! And, most of what they know actually enhances my experience. Seems like a good trade off to me.

What concerns me takes me back to a discussion (maybe an argument) I had with a close friend prior to the passing of the Patriot Act. He was all for it. I said it and our own government are the biggest threat to our democracy, bigger than any outside force. The NSA scares me!!!

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Gene Detroyer, Professor, Independent

I can't agree. I respect and want to protect my privacy as much as I am able. Sharing some information is okay. Isn't that what Facebook is, in reality? But where I shop and my credit card information is not something I want shared.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

I love David's perspective here. I completely agree that consumers wouldn't be so willing to give their information if they had "Big Brother" concerns with retailers, in general. I do believe that data security is important, to say the least, to consumers. Beyond that, I also believe that merchants should help shoppers understand reasons for capturing personal data.

There are so few merchants that currently and proactively communicate messages such as, "We would like to help ensure the products you want are in stock at our online/offline store, so please help us better understand your shopping habits by supplying the following information...." Or something like that. If the merchant is transparent in their information gathering, I believe shoppers will be more likely to participate in their programs.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

It comes down to each person's definition of "privacy." Frankly, I couldn't care less if you know where I've been and what I've purchased. The privacy part would be if you know "why." When you start trying to figure out the whys, now that's when I might get in your face! As Paula said...and that's my 2 cents!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

I am reminded of the incident a couple of years ago in which Target used its analytics to send baby promotions to a girl whose parents didn't yet know she was pregnant.

There is power in the data that's collected, and I don't see consumers putting a lot of faith in corporate America to use it wisely. Add to this the growing number of data breaches at major retailers, and there is a real cause for concern.

I have no issue with my data being collected if it is used in an aggregate statistic. But I realize that merely by interacting with a web site or entering a brick & mortar location, I have given up the ability, (and the right?) to retain privacy.

Lewis Olishansky, Principal, Retailmatics

It is incumbent on all retailers to deliver a safe experience when it comes to privacy. Lose the fine print and give the consumer a plain, easy-to-read and understand version of how (and why) you will use their data. Use companies like AllClear ID To "insure" against identity theft. That is what I hope for when I do business with a retailer.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I do believe that privacy awareness and related concerns (overwrought or not, David) are real and are heavily generational with the 45 and over crowd being both much more life savvy, and much, much more leery about how their personal data is collected, retained and used.

Of course time marches on. But in my opinion, retailers right now must be more conscious of who still has money to spend -- and who is actually spending it in general purpose establishments and online sites. Hint: it's not the Millennials or GenY. Thinking those demographics through should give smart retailers more respect for the perceptions and concerns of their actual "customers" about privacy. Please. Butlers and stalkers? Really?

'Liatt'

Privacy is a multidimensional concept. Some consumers are concerned about some subfactors and not others. Significant differences are found across consumers and across markets. Negative publicity about how individuals were harmed by a business selling or not protecting information could greatly limit what firms can learn about buyers and prospects (just consider how survey response rates have fallen). Best if retailers set very high standards on data and assume consumers are very concerned about privacy, even if they do not express those concerns.

'Ron'

The problem here is that the cart is way out in front of the horse, i.e., the ability to collect detailed customer-level data is far greater than retailers' ability to use it effectively. Most of the really creepy stuff that retailers can collect about you isn't particularly predictive of your economic value as a customer. So retailers are doing things simply because they can, instead of developing a really good understanding of what they should be doing.

Fortunately, for the most part, the boundaries of what is (or isn't) ethical line up pretty well with what is (or isn't) effective. Of course this may change in the future as data collection technologies become even more granular (how about in-store brainwave tracking?), but for now the "unethical-ineffective" guideline is a good one to rely upon.

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Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

Consumers are already reacting to the data breaches and have personal privacy and safety concerns founded in reality. The EU Courts have ruled against data collectors - how long before a US Court agrees? The pendulum is swinging back now. There is little to no benefit in risking privacy for any corporation.

Kelly Cochran, Retail Leasing Malls, Moonbeam Capital Investment, LLC.

I don't rely on any retailers to have the power to protect my privacy. I've recently signed up with a company to protect my identity when I realized how much of my personal information is in the hands of strangers. It's like having that extra deadbolt on your front door to keep out intruders. I wouldn't go anywhere without locking my front door. Now I don't conduct any business with credit cards or loyalty cards without identity theft protection.

I enjoy getting customized coupons and offers from selected retailer loyalty programs. They knocked and I let them in. I can just as easily kick them out and lock the door. It's ultimately my responsibility to make sure my information is secure, just like my home.

'RetailRetell'

There will always be a segment of population who wants absolute privacy and anonymity while shopping, while a large segment wants to be rewarded for frequent purchases and therefore give up a bit of privacy. The key is expectations and communication. If I am a regular at a restaurant, I expect they will greet me by name and point me to my favorite spot, and no one would complain "privacy invasion."

Retailers need to do a better job communicating in simple language what is captured and used and what benefit/offer is given to the customer as a result.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

With consumers, perception is reality, and forward thinking retailers need to make it a priority to educate their customers on their choices of store tracking technologies and how they work to enhance the overall shopping experience.

It's important for the consumer to know that NFC, RFID, QR codes, BLE, etc. are at play in helping them enjoy a more detailed, streamlined experience. If education becomes more commonplace, in time, privacy concerns will lessen.

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Karen S. Herman, Founder & Design Director, Gustie Creative LLC

As a consumer, I'm far more concerned about the consequences of identity theft (unlikely but devastating) than I am about the consequences of shopper tracking (nearly universal, but not particularly harmful).

Privacy is indeed "multi-dimensional" (thanks for the keen observation, 'Ron'). So when we debate privacy, we'd best make clear what dimensions we are talking about. Data security is exceedingly important for retailers, and as others have pointed out, huge data troves are tempting targets for bad actors. So don't capture and store it if you have no plans to use it to improve the shopper experience.

I think shoppers will get used to the idea that stores use technology to understand their movements and shopping patterns in the store. Transparency is desirable here -- especially if retailers state why these activities are intended to make shopping better. There really should be no expectation of privacy in a privately-owned retail space anyway. Security cams have been in place for decades.

How about a "Why We Watch" statement from every retailer that enumerates the retailer's objectives and how it can serve shoppers? A few items to begin the list:
1) To ensure your personal security while shopping
2) To make sure we have enough sales help available when stores are busy
3) To make sure the products you want are available when you need them
4) To learn about shopper preferences and improve our stores to meet them

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James Tenser, Principal, VSN Strategies

The "National Do Not Call" registry cannot even be enforced, which should be the simplest, most easily enforced consumer privacy option. The belief or wish that far more complex consumer protections can be devised and enforced for today's level of data collection is a pipe dream. Where personal data is collected, nefarious uses will emerge. We just can't help ourselves.

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

In 2013 LoyaltyOne research showed that 38% of consumers said they expect to receive tailored offers in return for providing personal data. That's a decline from 49% in 2011, representing a 22% drop. Additionally our study showed that 77% of consumers don't feel that they are receiving any real benefit by sharing their data.

In order to reverse this trend, retailers need to be clearer about the value exchange. Consumers have privacy concerns, but time and time again they have shown that they will willingly share MORE data if they see the benefits of doing so. It's our job as marketers to make these benefits clear by providing relevant and personalized offers.

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Bryan Pearson, President and CEO, LoyaltyOne

I've been particularly puzzled by the backlash against wi-fi or Beacon based tracking, since shoppers have been recorded on video at most stores for years. Retailers clearly have not done a good job of explaining the benefits of these programs and the truly limited amount of personal information that they collect.

Consumers should be worried about the security of their account information at the POS and in online transactions and until the frequency of data breaches is cut to a trickle, I think there will be a collective gut reaction against most retail data gathering.

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Martin Mehalchin, Partner, Lenati, LLC

Consumers will complain about that to which they know. The problem will get worse as consumers become enlightened. On the other hand, they don't know what they're asking for either.

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Christopher P. Ramey, President, Affluent Insights

I liked Gib Bassett's comment about how this data is being used - the example was that people like Amazon because it benefits them, and people dislike FB/Google tracking because it benefits advertisers.

Just like anything else, this type of technology can be used for good and bad, and I have the optimistic view.

When people think about the future they say "wow, wouldn't that be cool if I could walk into a restaurant, and they already knew what I wanted to order, mixed my favourite cocktail, started playing my favourite album, and the TV's switched to my favourite station? Without me doing a thing!"

This is a step in that direction people! Embrace this technology and appreciate how freaking COOL this could be, instead of worrying about advertisers targeting ads towards you. Yes, no one likes SPAM, but it's a first-world problem that we simply have to deal with. Fortunately, a lot of these companies are working with advocacy groups like www.futureofprivacy.org and understand people's privacy concerns.

Bennett Fitzgibbon, Marketing Manager, Turnstyle Solutions

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