Retail Customer Privacy And Big Data: Not Mutually Exclusive

Rick Dutta

It seems you can’t go more than a few days without news of another retailer investigating a data swipe of a credit card calls for customer privacybreach. That, combined with ongoing debate about surveillance by the U.S. National Security Administration, has consumers especially wary of privacy issues.

So as retailers embrace Big Data, they can’t be too careful when it comes to protecting their customers’ privacy. That’s true for customer data retailers collect online or through loyalty programs. It’s equally true for data gathered in the retail store.

The good news is that Big Data and customer privacy needn’t be mutually exclusive. As retailers implement innovative strategies to capture in-store data, they can do so in a way that protects the privacy of their customers while still yielding valuable insights into customer behavior and preferences.

Following the breadcrumbs

Online and mobile sales are increasingly important for retailers. But in-store sales still account for close to 95 percent of retail, say authorities such as McKinsey and the U.S. Census Bureau. And with those sales under pressure, retailers need to think hard about how they can shore up sales growth.

To that end, more retailers are looking at applying online techniques to in-store processes. One way to achieve that is by tracking in-store customer behavior. Just as e-commerce websites let you monitor online shoppers as they move from place to place in cyberspace, the smart application of technology can enable you to follow in-store buyers as they traverse your physical retail locations.

There are two primary means of collecting this kind of in-store data. The first is Wi-Fi routers that can track the movement of the mobile devices customers carry with them when they visit your store. You can begin this tracking even before customers enter the store, so you can understand where they’re coming from and which entrance they’re using. You can then follow them as they move throughout your retail location. And there’s no need for customers to opt in to your store’s WiFi network. As long as the WiFi on their mobile device is turned on, your can track their movements.

The second way to capture this data is through video cameras. This enables you to see how many customers visit an aisle, how many customers are there at a given time, how long they spend there, and even which items on which shelves they may be reaching for and taking with them.

Aggregated and actionable

Of course, retailers are increasingly aware that any time they capture customer data, they potentially risk invading the customer’s privacy and eroding the customer’s trust. Fortunately, with the kind of in-store data capture I’ve described, none of the data is personally identifiable. To the contrary, you’re simply gathering anonymous information about the activities and behaviors of shoppers in your store.

The purpose of collecting the data is to gain insights into the store’s performance. Monitoring traffic patterns and sales trends can help you improve product placement, optimize in-store promotions, and balance load to traffic.

Because it’s aggregated data, and not personal, customers needn’t opt in, and neither they nor you have to be concerned about breaches of privacy or trust. But even though the data is aggregated, it’s not theoretical. It reflects the actual activity of actual customers.

In short, you can capture real-world data that gives you real-world insights. That can equip you to take the actions and provide the customer experience that leads to higher sales in the channel that still claims the lion’s share of retail. All while maintaining customer privacy and trust.