Retailers' murky data collection practices tarnish personalization efforts
Data creates a paradox: Collect enough data to offer a seamless customer experience, but limit intake enough to avoid privacy concerns.
NEW YORK — For decades, store associates were the only tool retailers offered to personalize the shopping experience. Now, artificial intelligence and data analytics could replace a core retail service.
The shopping experience weaves across outlets including online, in-store or a combination of the two. As the trend continues, retailers search for savvy ways to increase personalization without overstepping compliance boundaries.
Data creates a paradox for retailers: Companies want to collect enough data to offer a seamless customer experience but limit intake enough to avoid privacy concerns.
Businesses use technology as a signal to investors, customers and employees that they're innovative. Dedicating funds to technology implies a company is working on improving the business and customer experience. Though innovation is often rewarded, companies have an obligation to be honest with customers about the role technology plays while they shop.
Retailers are encouraged to "follow the European standard right now," said Tony Drockton, founder and CEO of Hammitt handbags, while speaking at the National Retail Federation (NRF) conference in New York City Sunday, referring to the European Union's GDPR.
"Be honest with your customer," said Drockton. "Don't be embarrassed if you're using a beacon" to collect data.
Companies need to ask, what is acceptable for consumers to share and how much of it is appropriate for companies to use?
Purchase data is usually a safe zone for data collection, including information on what consumers buy, return or how long an item remains in their online shopping cart.
What's usually off limits is tracking done through social media, according to Sucharita Kodali, VP and principal analyst for e-business and channel strategy professionals at Forrester, while speaking at NRF.
Walking the fine line between useful and invasive data collection is something all retailers trying to hold onto relevancy in 2019 have to confront. Data relates to how it's categorized, dependent on what a retailer buys and what content they deliver, said Janet Sherlock, CIO of Ralph Lauren, while speaking at NRF.
Retailers are becoming invested in data as the majority of consumers, 63%, are interested in more personalized recommendations, according to a Retail Industry Leaders Association report.
The majority of consumers craving more tailored shopping experiences should have the data necessary to build stronger personal relationships. However, there are consumers who are more skeptical of data collection.
The balance of useful and overly invasive data collection hinges on categorizing customer preferences. Consumers with an aversion to data collection should be accounted for and collection practices manipulated enough to ease their concern, according to Kodali.
With the rise in data privacy awareness, states are eyeing the standards set by GDPR and California and retailers are honing in on how they're going to play the new rules.
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