The amount of data available to retailers today is staggering. This is no exaggeration. In 2012, MIT researchers calculated that total company data had multiplied by 1,000 times in the previous decade. Most corporations saw an annual growth in data volumes by 35% to 50%. Then, there is external data from surveys, social media, weather forecasts, email, instant messaging, video records, census studies etc. In the case of retail there is even more granular customer data to be factored: customer location, where they shop, when they shop, preferred modes of payment, their desired mode of communication, etc. Shouldn’t retailers be delighted by the type and volume of customer data available? This doesn’t seem to be the general opinion. Legal restrictions on data use are becoming a major concern. In fact, regulatory concerns are the second largest impediment to data collection and analysis for retailers (data volume is the #1 barrier). Now, a recent study by the Economist Intelligence Unit (EIU) commissioned by Wipro called The Data Storm: Retail and the big data revolution shows that shrewd retailers are finding an opportunity in this.
In the past year, according to the EIU study, two-thirds of respondents increased the amount of information that they hold on individual customers. This implies a significant willingness to invest in data collection. Despite the eagerness, within this group, 64% cite legal problems with data collection as a leading barrier. Those who had not increased the amount of information they hold on customers were facing the same problem. Legal restrictions on gathering customer information were cited by 59% as the most common reason for their relative inactivity. The General Data Protection Regulation in the European Union was the party spoiler. In North America the situation was no different. In both regions, the number saying that data privacy regulation is the single biggest of any impediments to collecting more customer data was close to the survey average (36%).
Amidst the grey clouds of regulatory restrictions, smart retailers see a silver lining. Andrew Ware, CFO, Karen Millen, a UK-headquartered leader in women’s clothing with over 200 stores in 40 countries, thinks that compliance can be turned into an opportunity. He told researchers for the EIU study that retailers who go the extra mile with privacy can create business differentiation. “Far-sighted and responsible companies,” he said, “are waking up to the fact that customers know that their data is being collected and know that they need to give the customer access to and transparency on the data that is being held on them.” The trick, says Ware, is to not spam customers with unsolicited, irritating and irrelevant marketing; instead, data should be used to create highly targeted offers that deliver genuine customer benefits.
Retailers need to respect the data shared by customers. They need to build on the trust reposed in them by their customers. Most of all, retailers need to repay this trust by making customers glad they shared the data in the first place.