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Retailers cannot ignore consumer concerns over data privacy

With the growth of digital in the retail ecosystem, we have seen the rise of data. It is now retail 101 to collect consumers’ email addresses at the point of sale to utilise in digital marketing, product development and personalisation. But how is this affecting customers’ interactions with retailers? How is consumer behaviour changing towards the usage of their data?

Whilst most consumers are aware retailers collect their personal data to enable them to provide a better experience, many do not fully understand the type of information being collected and how the information is utilised. An in-depth study we conducted into Australians’ attitudes towards online privacy has revealed that Australians have huge concerns about how their personal information is collected and used when shopping online.

Most are concerned about their privacy when shopping and how this data is collected and utilised. According to our study, 81 per cent of Australian consumers are concerned about their data. This is consistent with findings from the Consumer Policy Research Centre, which found that majority of Australians are uncomfortable with companies collecting their personal data.

We found that concern about privacy when shopping online was one of the main issues that prevent consumers from shopping at Amazon.

“I do not like giving my banking information over the internet”

“I do not want retailers to collect my personal information”

“I am concerned about how companies use my private information”

In fact, one of the reasons consumers do not wish to sign up for Amazon Prime is the concern about how Amazon would use their data.

The general concern about data and privacy has changed many consumers’ behaviour with online retailers. Consumers are, therefore, using various strategies to protect their information.

Fifty-three per cent of respondents in our survey say they only purchase with the online retailers they trust. About 26 per cent say they look into a retailer’s background and online reviews before buying and 26 per cent say they do not sign up for newsletters as frequently. Many also regularly clear their browsing history, and some use a VPN, all to prevent companies from tracking their online activities. Some even claim that the concern has made them purchase with only online retailers that have a physical store.

According to the study, 43 per cent do not like retailers sending them personalised emails based on their previous shopping behaviour because they feel that the companies are tracking their movements. Twenty-six per cent are open to receiving personalised emails because they reduce the number of irrelevant emails.

While some consumers are comfortable with retailers collecting data essential for the delivery of their products or service, many want companies to be open about how they utilise the collected information and to give them options to opt-out of certain types of data collection and use.

In fact, Australia’s Online Privacy Law requires organisations to “clearly express policies” on the management of their customers’ personal information. Organisations are also required to let their customers know what type of personal data they collect, for what purpose, and how the data is collected.

Retailers in Australia cannot ignore consumer concerns over privacy any longer. They need to ensure transparency in how they collect consumer data and how they use the data. They also need to sensitise consumers on the type of personal information they collect from them.

Retailers need to re-examine what they are offering consumers in return for the data collected, what is the value added to the consumer in this transaction. The collection of data from a loyalty scheme or newsletter is so valuable to a retailer’s success in communicating with their consumers, they now need to consider how to build trust and transparency to allow this to continue.

As a retailer, it is important to build trust with their consumer. This can be done by showing transparency in your processes, in your data collection and your product production. Warranties, guarantees and returns policy offer a level of trust to consumers. Leveraging off your brand heritage and brand story can also play a key part in building this trust.

Retailers must connect with consumers on an emotional level to really understand what they are looking for in their relationship with you.

Anastasia Lloyd-Wallis is general manager of consumer insights and projects at Retail Doctor Group.

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