Shoppers Don’t Trust Retailers With Their Data, Report Shows

By Julian Thumm | 11 May 2016

Deloitte’s Australian Privacy Index shows retailers failing to build customer trust when it comes to data privacy policies and transparency of data usage.

Australian consumers don’t trust retailers with their data. According to Deloitte’s 2016 Australian Privacy Index, the retail sector came in at number 10 (of 13) on the list of most trusted industries in terms of data privacy, down from fifth last year.

Overall ranking of most trusted industries with best perceived governance and up-to-date regulatory approach.

Overall sector rankings. Source: Deloitte Australian Privacy Index 2016.

The overall sector rankings represent customer trust based on the best perceived governance and most up-to-date regulatory approach.

The Deloitte privacy index surveys consumer expectations around data privacy and assess whether industries exhibit good privacy practices. These include:

  • Being perceived by consumers as using their information reliably and respectfully
  • Implementing adequate security measures when information is submitted via publicly available means
  • Informing consumers how their information collected via mobile apps would be used.

“Consumers are increasingly aware of how their information could be used and are keenly interested in where their information is going. Transparency to build trust has never been more important,” the report said.

In fact, the 2016 Index found that more than 90 percent of participants valued trust over convenience or website or app usability.

This is bad news for retailers, which according to the Index are struggling to convince customers that their data is safe or being responsibly shared.

Overall, the retail sector ranked 10th with only the social media, media and real estate sectors having worse trust ratings among customers.

The industries with the highest privacy trust ratings — banking and finance, government, energy, and insurance — are among the most highly regulated sectors. Conversely, the industries with the lowest trust ratings are not nearly as regulated. This means that it is up to retailers to self-regulate to some extent to convince shoppers of their trustworthiness.

Source: Deloitte Australian Privacy Index 2016.

Source: Deloitte Australian Privacy Index 2016.

Consumer sentiment

In terms of consumer sentiment, the retail sector ranked 11th out of 13, clearly indicating that customers do not trust retailers with their data. The index assessed trust alongside complaints received, as well as how brands handle data breaches. The recent spate of high-profile retail data breaches has likely taken its toll on customer trust. However, the lack of transparency regarding many retailers’ cookie policies and how data is stored, used and shared has likely also been a factor.

Website analysis

In better news, the Index shows retailers put in a stronger performance in Deloitte’s website analysis of online privacy policies and security measures. In this instance, the retail sector rose to seventh out of 13.

Organisations that did well in this area had:

  • Recently updated their privacy policies
  • Provided a list of countries to which information is disclosed
  • Had session cookies rather than persistent cookies
  • Had clearly defined password rules
  • Provided and enforced SSL/TLS encryption

Mobile app analysis

In even better news, the retail sector rose to fifth place in mobile app privacy. Deloitte’s mobile app analysis determined whether app usage actually reflected the stated privacy policies.

Organisations that performed best:

  • Had apps with a policy notification
  • Provided a complete list of countries to which they disclose data
  • Allowed users to restrict application permissions

However, some alarming app findings included:

  • 28 percent of apps did not have an accessible privacy policy before login
  • Or these, 45 precent did not have a privacy policy accessible from Google Play
  • 96 percent of apps transferred user information in or out of the device without logging in

Future trends

As regulation and consumer awareness around data privacy continue to evolve, several trends are emerging. Balancing an organisation’s desire to maximise data usage with a customer desire for privacy, transparency and confidence will be integral to the retail sector developing better trust among shoppers.

Deloitte has identified five key trends to help organisations help ensure data privacy best practice.

  • Consumers are becoming more discerning: “As consumers are becoming increasingly aware of how organisations are using and handling their personal information you need to consult more about your use of their data.”
  • Consumers want choice: Retailers should move towards more dynamic opt-in consent options to allow customers to knowingly determine and agree to how their data is used.
  • Increased and active management of third parties: Be aware of how third parties make use of your customers’ data and ensure that all contractors adhere to your internal privacy policies.
  • Global approach to privacy and data protection: As more retailers reach out to international markets, it’s crucial for retailers to be aware of and adhere to data regulations across jurisdictions.
  • Balance data communication and customer choice: Ensure customers are aware of how you are using their data, particularly if it’s being used to drive further revenue opportunities. If this comes out in other ways it can be a significant breach of trust and lead to substantial brand damage.

 

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