The retail industry has fallen far behind other sectors when it comes to protecting the online privacy of their customers and users. This is directly reflected in the level of trust consumers have in businesses, with 43% of Australians likely to trust financial services firms to keep their private information absolutely private, but only 6% feeling the same way about retailers.
The data highlights how consumers feel they have no control or choice when sharing their personal data, often leaving it with businesses to use as they wish. The impact this has on brands in the retail sector is significant. Customer trust is critical to developing and sustaining customer loyalty. It is imperative that retailers start to take proactive and measured steps towards rectifying their current approaches to online privacy and the security of their customers’ data to ensure they stay competitive.
Cyber threats to shoppers are only going to increase
Cybercriminals, particularly financial criminals, are getting savvier and more well-resourced. They are prone to leveraging timely issues to their advantage. For example, throughout the pandemic, fraudsters and identity thieves have impersonated the ATO, superannuation funds, major banks and more while pretending to contact consumers on matters related to recent payments or schemes announced by the government.
Moving forward, more political, financial, and economic announcements are expected or already happening. This includes communications related to interest rate rises, the general rising costs of living and the impact on costs of materials and products, and new policies announced leading up to or following the election. These moments present opportunities for financial criminals to contact consumers at their most vulnerable or curious moments and request personal information in unassuming ways.
Digital trust is priceless
As retailers continue to evolve the ways they reach and service customers through omnichannel experiences, the need for digital trust will grow. Brands will compete against each other for the right to responsibly collect, use, and manage customer data for the purposes of servicing customers in ways that increase loyalty and overall sales.
With trust in retail brands already concerningly low, the potential of a further decline in trust to lead to the complete demise of a business should not be underestimated. Once customers stop trusting retailers with their digital information and data, there are limited ways for that brand to interact with those customers, and savvier competitors will swoop in to take market share.
Retailers need to step up to the challenge and face up to their risks
Retailers can no longer afford to rely on consumer complacency when it comes to online privacy and personal data. There needs to be a proactive and preventative approach to protecting customer data that starts with taking accountability for the secure collection and management of customer data in the first place. Most consumers recognise they are responsible for how and when they share their personal information, but many also expect organisations to give them complete refunds and act swiftly in the case of a fraudster or identity theft intercepting that information.
It is not worth the risk for retailers to wait for these moments to address financial crime in hindsight. Addressing the challenge must start with recognising the broad array of threats and financial crimes that exist today and, as a result, the reality that retail brands cannot counter these attacks on their own. Technology-based solutions that leverage capabilities such as artificial intelligence and machine learning are a must-have, not a ‘nice to have’, in this digital climate. Assumptions that anything less will be sufficient could lead to serious and immediate loss of customer loyalty and revenue.
Carol Chris is regional general manager for Australia & New Zealand at GBG.