Post-lockdown, how can non-essential retailers win back consumers in-store? DLA Piper’s Chloe Forster and Robyn Palmer believe ambient commerce is one answer – but it comes with some veritable risks
Social distancing is forcing us to question how we interact with one another and it’s becoming apparent that customer expectations are changing, particularly in how consumers wish to make transactions.
Stores will have to adapt to this social change and we could see a new class of technology-led sensory shopping emerging in the not too distant future.
Picture this: post-lockdown, you are walking home from work one evening after a tiring day. Out of the corner of your eye, you notice a digital display in a shop window. It greets you by name and flashes up an offer for your favourite chocolate bar.
You enter the shop and the chocolate bar is waiting, ready to go. You pick it up and leave the shop; no further action or human interaction on your part needed.
This may sound like science fiction, but this technology exists today and it’s just one example of ambient commerce.
Ambient commerce involves retailers surrounding consumers with technology for an immersive and sensory shopping experience, including through the deployment of artificial intelligence and virtual augmented reality,
As consumer expectations shift, we predict an acceleration in its uptake and implementation across remaining stores. Post-lockdown (and once it is safe to do so) encouraging people out of their homes and back in-store will be top of the agenda for retailers and ambient commerce will have an important role to play.
But while the possibilities offered by these technologies are undoubtedly attractive, albeit admittedly at a cost, retailers must consider the legal issues before assessing whether it’s viable for their business.
Getting it right
Ambient commerce relies on combining a range of digital, transformative technologies such as location tracking, facial recognition, sentiment analysis, collection and analysis of consumers’ data footprints (ie: retail habits and buying history), with apps on consumers’ phones sharing data between players and quicker communication thanks to 5G.
This trend gives rise to several legal issues as retailers engaging in this evolution of the high street will need to track the behaviours of their customers. This will necessarily entail collecting and processing large amounts of personal and in some cases, sensitive, data such as facial profiles, fingerprints, location data and device IDs.
Retailers within the UK and the European Economic Area will need to comply with GDPR, which means ensuring there is a legal basis for the processing, providing appropriate security measures for the data.
Crucially, these retailers must ensure shoppers understand what personal data is being collected, how it is being used and shared. There will, of course, be challenges in meeting the latter requirement without detracting from the seamless shopping experience.
Similarly, as bigger pools of data are amassed, the risk from any breach or loss of data rises. Many retailers will be aware of the much-publicised fines that can be levied by EU data protection regulators (up to the greater of €20m or 4% of the group’s global annual turnover).
However, there is also a very real risk of claims by affected data subjects and significant adverse publicity for a retailer that falls foul of GDPR requirements in a high-profile breach.
Other key considerations of ambient commerce
Closely linked to data protection law requirements is the issue of cybersecurity.
Retailers will need to protect their systems, data and networks, in an Internet of Things environment because of the number of physical of devices that must be protected in a non-traditionally secure environment.
Second, there will be a greater risk of cyber-fraud. By offering new purchasing channels, new opportunities are created which fraudsters will look to exploit.
Third, there are likely to be considerations around contract formation as to how, and at which point in the process, a contract is formed when shopping in an ambient commerce environment. Retailers will need to think about the legalities around the formation of a contract and ensure that these are adequately fulfilled.
Evidently, ambient commerce can help retailers navigate the changing landscape, but legal issues cannot be ignored.
Chloe Forster is a partner at DLA Piper and Robyn Palmer is legal director at DLA Piper.