Opinion: Retailers can turn data concern into opportunity

We are in the midst of a revolution, and the expectations are high for retailers: from multichannel customer communications to the transformation of customer convenience to artificial intelligence that enables the replacement of human tasks with robotics.

We have seen the leaders of the pack – the digital pioneers of the retail industry – generate huge commercial success and personal wealth. With Jeff Bezos perhaps being the poster child.

However, the relentless march of the tech giants – now labelled the wonderfully sinister FANGs (Facebook, Amazon, Netflix and Google) – faltered recently when Facebook breached the trust of its community of billions, apparently selling its data for political manipulation purposes.

The scandal is a pivotal moment in the public’s digital consciousness.

Fully understanding privacy

Historically, consumer opinions on the sanctity of our privacy in this new digital world have been contradictory.

Numerous studies have shown conflicting views on where we would set the guide rails, and it is certainly the case that there is a dearth of technological comprehension.

While this confusion is perhaps understandable in the public at large, one would expect an industry that has pioneered analysing customer data to have a synchronous understanding of privacy.

Unfortunately, data science techniques that can be used to effectively safeguard privacy are not well understood.

To some extent, the EU-led GDPR is an attempt to regulate what some commentators have labelled the ‘digital Wild West’.

However, the GDPR is just a baseline. Any organisation that holds any personal information must now go further.

“Historically, consumer opinions on the sanctity of our privacy in this new digital world have been contradictory”

We have seen data security breaches hit the headlines before, but the companies affected have been partly perceived as victims. The Facebook/Cambridge Analytica scandal changes everything.

This was more than an online bank robbery. This was the first major breach in privacy. An acknowledgement of the power of data not only to create Silicon Valley billionaires but, far more sinisterly, obtain political advantage.

The fact that the data was taken from social sites, not commercial transactions, feels like a double invasion of privacy.

For the pioneers of data analysis in retail, this is a wake-up call to establish clear privacy codes of conduct and systems that put the protection of sensitive customer data first.

This is not intended as an ethical preach: the differentials in share performance across technology stocks have shown that there is also value in an ethical and robust approach to privacy.

Apple fought hard with the US government to defend its privacy technology and adoption of privacy engineering techniques. This battle has served it well in the stock market, while competitors have seen billions wiped off their companies’ value.

A decade’s research in privacy engineering – and the more recent creation of products that go beyond ‘just’ protecting the privacy of sensitive data – enable broader use of data that has previously been off-limits.

We recently worked with Dunnhumby – perhaps one of the most famous retail data pioneers – to support a safer approach to its internal data use.

Its chief focus is a product designed to improve retail performance by analysing human behaviour in front of shelves.

“One would expect an industry that has pioneered analysing customer data to have a synchronous understanding of privacy”

Our engineers worked with Dunnhumby to allow its extensive data set to be anonymised, protecting proprietary trading data for non-production, demo and test analysis.

Applying privacy engineering techniques has allowed Dunnhumby to present its product to clients while respecting highly sensitive customer data.

Protecting information

It is not fantastic to envisage the political attention generated by Facebook leading to increased regulation.

However, we can all take comfort in the knowledge that the UK is home to a wealth of academic study in data science and engineering.

The retail industry has a great opportunity to tap into this knowledge to protect sensitive customer information; protect their brands and, indeed, differentiate.

Science is an important tool at our disposal, but we must always come back to the relationship between retailers and their customers.

We have all woken up to the sinister potential of ‘big data’ and just how exposed we are online.

Retailers, the original pioneers, now have a great chance to demonstrate that data is valued as a commercial opportunity and that the responsibility of holding this data is taken seriously.

Retailers who do not heed the wake-up call could find themselves in a breach situation that damages their customer relationships.

We are all seeking to better understand this new digital world, but the fundamental principles of relationships, ethics and privacy, remain the same.