Retailers who are transparent about their customer data policies have much to gain.
According to the new Deloitte U.S. Consumer Data Privacy study from Deloitte, nearly half of U.S. consumers (47%) feel they have little to no control of their personal data, and one in three has been exposed to a data compromise. Perhaps it is not surprising that the vast majority (86%) of consumers believe they should be able to opt-out of the sale of their data. In addition, nearly half of U.S. states have introduced or enacted new privacy legislation, impacting 54% of the population.
Deloitte surveyed 2,000 consumers to gain insights into their concerns about data privacy and their expectations for retailers to protect it, and also surveyed 201 retail executives on data privacy. In good news for retailers, seven in 10 (71%) consumers are willing to share personal data if they receive better pricing, special discounts or exclusive offers. And consumers who are satisfied with privacy policies are more likely to be open or neutral about sharing personal data (73%), compared to those who are unsatisfied or unaware (57%).
Examining retail attitudes toward consumer data privacy, the survey found that 75% of retailers believe regulations will have a moderate to significant impact on their business. However, only 22% have optimally integrated their data privacy plan with corporate and business unit strategy planning.
Yet 62% of retailers have more than 50 information systems (e.g., spreadsheets, customer relationship management systems, email, point-of-sale) holding consumer data in their organization, which increases the vulnerability of their data. Deloitte only classified 32% of retailer respondents as “leaders” in terms of privacy. Leaders are trust-focused and consumer-centric with privacy integrated into corporate strategy.
“Laggards,” those who had not made privacy a priority, represented 27%. “Adopters,” whose organizations were working to increase the focus on privacy, but at varying focus levels, represented 41% of all retailers surveyed. Inadequate data management within an organization (50%), inadequate technology tools for privacy management (45%), lack of sufficient funding (43%), and lack of clear government regulation (43%) rank among the key challenges cited by retailers.
The survey also found a disconnect between how retailers perceive the way retailers use their personal data and how retailers actually leverage it. More than two-thirds of consumers believe data is being predominantly used for targeted marketing and 55% of consumers believe retailers share data with third parties or sell it to outside buyers.
However, retail executives said the top three uses of consumer data are: increasing operational efficiencies (53%), improving product selection (52%), enhancing in-store services or experiences (49%).
Only 5% of consumers listed retailers among the top three businesses they trust with their personal data as compared to other industries. Further, 63% believe retailers are accountable for ensuring consumer privacy in the retail industry, more so than the government (50%), technology partners (27%) or even consumers themselves (27%). This challenge is compounded further by the disconnect between consumer perception and what information retailers collect or how they use it, according to Deloitte.
“While some retailers have moved the bar on data privacy, there is still a lot of work to do,” said Rod Sides, vice chairman and U.S. leader, retail, wholesale and distribution, Deloitte Consulting LLP. “The retail industry should advocate for a consumer privacy standard putting consumer centricity at the core and trust as the guide. Transparency with consumers about what you collect and how you use it can go a long way in developing trust.”