RILA Survey: High Priority Placed on Protecting Consumer Data
A new report released by the Retail Industry Leaders Association
(RILA) in partnership with Retail Systems Research (RSR) finds merchants
viewing data protection as a means to build their brand and business across
channels in the minds of consumers.
"For 47 percent of overall
respondents, proactively addressing privacy and security issues enables
them to move forward with an aggressive cross-channel agenda," said Steve
Rowen, a managing partner of RSR and co-author of Building
Trust and Growing the Brand: The Role of Privacy and Security in Retail
2010, in a press release.
Forty-two percent agreed with the statement: “Capturing and adequately securing
customer data enables us to consider a more active dialogue with our ‘best’
customers” while 28 percent saw it as a “marketable reason for consumer loyalty.”
Casey Chroust, executive vice
president for retail operations for RILA, added, "Retailers have gone
to great lengths to incorporate privacy as a strategic component of their
daily operations and remain vigilant in protecting customer data while
providing the value customers want. When utilized properly, customer-specific
data can be used to enhance the shopping experience for consumers."
While it is not easy to quantify a strategic advantage from
protecting consumer information, the report submits there is a clear disadvantage
when data security and customer privacy are not protected. “Consumers
give retailers zero-percent credit for handling these issues well, but are
merciless on retailers who violate their trust. It’s a risk not worth taking,” write
the authors. “Retail Winners have, by their behavior, created a roadmap for
others to follow: elevate the challenges to the policy level, define business-level
accountability, define and communicate the company’s commitment, develop
repeatable ‘best practice-based’ processes, and implement them.”
Discussion Questions: Do you see a strategic advantage
in protecting shopper data and utilizing customer-specific data? How do
you think retailers are doing on these two fronts and what can they do
to improve?
This is a strange issue in that, as the article states, consumers do not give credit or loyalty to retailers that do a good job of protecting their data, but are merciless on retailers who violate their trust. So it is a strategic advantage provided a negative experience does not happen.
Retailers owe it to their customers to protect their data. This is just basic business sense. Touting this might bring a retailer undue attention from hackers. It’s better to leave data security behind the scenes and be ultra-vigilant in safeguarding the information.
This is and will be a competitive requirement–not a “strategic advantage.”
It sounds like protecting data is a must for all retailers, and the ones that drop the ball will suffer at the hands of angry bloggers and tweeters. If social media is the new way for retailers to market themselves, merchants that don’t have processes in place better get their act together fast.
Agree. Most consumers don’t even think about this but if a violation occurs, they will be unforgiving. This is similar to product recalls. Something you must do to protect your brand but won’t buy you many “atta’ boy” awards.
Ben Ball said it–it’s not an “advantage” to keep customer data safe; it’s a fundamental requirement, it’s a contractual obligation, and it’s the law.
At the same time, if you don’t capture and capitalize on customer data, you are driving blind. You will have no idea who your best (and worst) shoppers are, what they buy, or when you are starting to lose them.
Protecting consumer data is fundamental in creating shopper trust and loyalty. It is in retailer interest to communicate with shoppers on how data is protected and if/how it is shared. Shoppers should have an option if data is to be shared with third parties and know what protection is afforded there as well.
Many retailers still don’t have a credentialed Chief Information Security Officer on staff. Things may look rosy when retailers are compared to other retailers, but compared with other industries retail lags alarmingly.
These two ideas–data privacy and data utilization – go hand in hand in terms of retailer responsibility.
As a general rule, most retailers do an acceptable job with protecting consumer data (though there have been a few notable exceptions such as the problems TJX had) but the majority of retailers completely fail to properly utilize customer data.
While the obvious opportunity for customer data is marketing, there are also a wide range of applications where data can be used for business and customer intelligence (especially when linked with merchandising and financial data) and operations (e.g., merchandise returns, loss prevention).
Retailers are not always customer-centric nor likewise embracing forward leaning-technology. Those that are (and do), such as Amazon, Nordstrom and Best Buy, will continue to outperform their competition.
This issue is becoming increasingly important for retailers, as numerous recent stories related to data breaches attest. And this includes firms that diligently comply with data-security guidelines, such as the retailer Hannaford Brothers.
In a recent study, my coauthors (from Wharton and London Business School) and I show that customer data can be collected in an easy-to-manage, scalable, privacy-preserving format without significantly compromising the inferences that can be made about the customers’ purchasing activity. We use simple data summaries and show that if our proposed methodology is used, these data summaries can work just as well as individual-level data. This can be an attractive data processing option in many settings for many firms.
A “proof of concept” is available in the paper “Estimating Customer-Lifetime Value Using Aggregated Data” and a more detailed and very comprehensive paper is coming soon. If anybody is interested, please contact me in a few weeks.
I’m not sure that protecting data is in the final sales analysis all that important. Look at TJX, Hannaford and others that have suffered breaches. None seems to have taken much of a hit as a result.