Foodstuffs

Mazen Kassis

In recent years, privacy has become a major concern for people and businesses alike, and it is likely to become even more important as trust, which privacy underpins, is fast becoming a key currency of the present and the future. When privacy is breached, there is an erosion, or in some cases, loss of trust amongst an organisation’s customers, employees, and suppliers (i.e., stakeholders). As the retail industry continues to evolve and become more data-driven, retailers will likely be required to prioritise privacy to ensure that they retain and/or build trust with stakeholders and remain competitive (more on this later).

In the supermarket business and in the wider retail industry, there are two important reasons why data privacy is prominent. The first is that there’s a growing awareness in many societies about the importance of privacy and data sovereignty around personal information. As stakeholders become more aware of the risks associated with breaches and other privacy-related incidents, they will be more likely to choose retailers that they trust to protect their data (i.e., the competitive advantage angle). The second is because of the growing amount of data that retailers are collecting, storing using and sharing. With the rise of digital technologies, particularly since COVID, retailers now have access to a wide (and growing) range of data about their stakeholders, including demographic information, purchase history and browsing behaviour. This data can be used in valuable and increasingly savvy ways to personalise and enhance customer experience, improve marketing and advertising initiatives, and drive sales.

However, as retailers amass personal information, they become more vulnerable to breaches and other privacy-related incidents. This puts sensitive stakeholder information at risk and can lead to serious consequences for both the retailer and the stakeholder, such as financial losses and legal action. Perhaps most importantly for organisations, though, is the increased risk of damaging an organisation’s reputation, which can be difficult to bounce back from (or even quantify).

"It’s worth underscoring that retailers that can demonstrate a commitment to data privacy and security will be better positioned to build trust with customers, which can lead to increased loyalty, repeat business, and positive word-of-mouth"

To mitigate these risks and protect stakeholder data, retailers will need to take a proactive approach to data privacy. This will involve implementing robust security measures and data governance policies, as well as regularly reviewing and updating these policies to stay in compliance with changing regulations. The prevailing view in privacy-circles seems to be that the European General Data Protection Regulation, or GDPR, is the current gold-standard, globally. While it may not apply in all contexts, there’s a strong argument that organisations should nevertheless aim to operate in a compliant manner to GDPR. This will oblige retailers to be transparent with stakeholders about what data they are collecting, why they are collecting it, how it is being used, and who it is being shared with, amongst other requirements. All these actions should be viewed and communicated as not simply “compliance exercises”, but as critical principles to adhere to on the journey to engendering trust amongst stakeholders.

It’s worth underscoring that retailers that can demonstrate a commitment to data privacy and security will be better positioned to build trust with customers, which can lead to increased loyalty, repeat business, and positive word-of-mouth. On the other hand, retailers that are seen as negligent in protecting customer data may face reputational damage, customer turnover, and financial losses.

There are many ways an organisation can work to engender trust. Topical methods include the use of machine learning (ML) such as Natural Language Processing to extract information from unstructured data (e.g., emails, social media posts) to Neural Networks, which can identify patterns in data and make predictions about future data points. These sorts of techniques are increasingly being used as proactive tools to enhance data that drives better decisions and more informed actions. The rise in prevalence of these tools in retail brings with its use important privacy implications. There are several important trends in this space, but perhaps the most impactful topic is also seen as the least “sexy”: data governance. The adage a decision or an action can only be as good as the quality of the information used to make the decision or take the action, comes to mind. Despite its foundational importance, getting senior executives enthused on this topic can be like trying to draw blood from a stone. With constantly increasing amounts of data being collected, stored, and used by retailers, robust measures must be adopted to ensure good practice across organisation. This is where the Chief Data Officer (CDO) – or equivalent function – has a special responsibility.

As the use of ML becomes business-as-usual, its vital that CDOs embed privacy-by-design principles into everyday practice when designing and implementing these technologies. These principles should be applied at the earliest stages of initiative development. Retailers that don’t appropriately consider data privacy and embed associated good practice in their organisation unnecessarily raise the risk of breaches and limit the ability of others to fully leverage technologies to drive growth in trust.

In conclusion, data privacy is becoming an increasingly important competitive advantage in the retail industry. As retailers collect and store more data, they become more vulnerable to data breaches and other privacy-related incidents, which can lead to serious consequences for both the retailer and the customer. By prioritizing data privacy, retailers can mitigate these risks, build trust with customers, and stay compliant with changing regulations. CDOs must play a leading role in this space and work to ensure that privacy is taken seriously, and that appropriate technologies, policies, and procedures are put in place to protect stakeholder data. As the retail industry continues to evolve, it’s critical that retailers stay ahead of the curve on data privacy and security to protect customer data and maintain trust.