Loyalty programmes, apps, online shopping and digital marketing have changed the face of retail. And secure data is at the heart of it all.
Grocery retailers are the second most trusted organisations for Irish consumers’ data after medical organisations and even more so than government institutions, according to a new study by Deloitte and grocery retail group Ahold Delhaize.
But it is equally clear that consumers have high expectations about transparency, choice and control of their data.
“Data, like oil, is only useful when refined and the data analytics departments within all grocery retailers are certainly growing in importance”
The study centres around 15,000 respondents across 15 countries including Ireland into European attitudes on the use of consumer data by organizations and grocery retailers in particular.
The introduction of loyalty programs, the growth of online shopping, and digital marketing are just some of the influences that have changed the face of retail.
In recent weeks Lidl in Ireland launched its Lidl Plus loyalty app which promises discounts for customers, while other chains like Tesco, Dunnes and SuperValu also have loyalty discounts and rewards programmes in place.
Inside the minds of shoppers
Grocery shopping data is a potential source of valuable insights into consumers’ lives, providing information, for example, about household composition, lifestyle preferences, general health, household wealth and dietary preference.
“This increased ability to understand consumers needs to be used responsibly, with consumers’ preferences at the core”
Grocery shopping data used to be anonymous (largely based on basket composition), but the introduction of loyalty cards and the move to online has increased retailers’ potential understanding of the behaviour and preferences of individual consumers.
“This increased ability to understand consumers needs to be used responsibly, with consumers’ preferences at the core,” says Daniel Murray, Partner and Head of Consumer at Deloitte Ireland. “Service providers should be aware of how customers feel about their data being used and the types of services that consumers are willing to share their data for.”
The research reveals a willingness among consumers to share their data with grocery retailers, who are generally trusted by consumers. With only 30pc of respondents across Europe indicating they are unwilling to share their data, this is more favorable than for non-grocery retailers, financial institutions, digital platforms, and social media platforms. In Ireland, medical service providers are the only other organizations that consumers in Ireland trust more with their data, with grocery retailers ranking ahead of even government institutions in Ireland, UK, France and Belgium.
There is a greater willingness to share personal data among younger consumers and those who shop online more frequently. Young people in the 18 to 29 age group are more willing to share personal data (an average of 3.1 on the scale 1 to 5) than those who are 60 years or older (2.6).
Respondents were asked about their willingness to share 18 types of personal information, such as demographic data and information about health and income. In general, they are willing to share data on demographics and about the products they buy and how often—59pc are “very willing or “somewhat willing” to share data on product purchase and their level of education. Almost 40pc of respondents are willing to share detailed health information such as allergies and heart rate, but only 28pc are willing to share location data.
The strongest resistance is to sharing financial information, with two-thirds of respondents being “not at all willing” to share their bank account transactions.
The findings from this report show that although consumers generally trust grocery retailers with their data, they feel there is room for improvement when it comes to transparency, choice, and control over their personal data. The report also looks at how the industry may justify this trust and develop personalized marketing in an ethical way.
“Data ethics should be at the top of the digital transformation agenda for all companies gathering consumer information,” says Daniel Murray.
“It’s important that companies are transparent about what data they are collecting, what they are doing with it, what third-party data they are purchasing, and how are they leveraging it.
“Data-use allows for personalisation of products, enabling companies to be more efficient and create a better customer experience. But these benefits are only possible with trust: trust that the data economy is ultimately about serving the customer and not just about leveraging customer data for corporate benefit.”
Data is the new oil
Owen Clifford, head of Retail Convenience Sector at Bank of Ireland confirmed that retail chains in Ireland view data as a vital component of their businesses well into the future.
“Given the competitive nature of the Irish grocery sector, retailers have been proactively utilising loyalty-based schemes to attract and retain customers in recent years. The development of these loyalty schemes to incorporate intuitive, easy to use mobile apps has allowed the grocery retailers to accumulate more detailed data in respect of their customers.
“Data, like oil, is only useful when refined and the data analytics departments within all grocery retailers are certainly growing in importance.”
Clifford pointed out that the Covid-19 pandemic and lockdown since March had a seismic effect on Irish consumer shopping habits, including the return of the big weekly shop and the rise of mobile and online shopping.
“Covid-19 has clearly highlighted the benefits of mobile shopping — its ease and immediacy. Mobile commerce will retain this momentum and will only accelerate further in grocery. As consumers, we will expect an app that allows us to browse offers, provenance of products, dining options, ingredients and ultimately to order/purchase our groceries.
“We will also expect that our personal data is utilised to deliver personalised offers and bespoke loyalty rewards. The cybersecurity platform employed by retailers will be key in the expansion of this channel.
“As consumers, we are all more aware of the threat of cybercrime and our willingness to provide data will be linked to the trust we place in the retailer and their IT security systems. A breach of customer data could severely hamper the long-term development of a retailer’s loyalty programme,” Clifford warned.
Clifford also pointed out that as the use of mobile apps increases, this will present grocery retailers with an opportunity to develop an additional income stream – advertising within the app from brands seeking to engage with their customers.
“This will need to be managed carefully opposite us the consumer – the advertising needs to be relevant to the individual customer to prevent dis-engagement and an erosion of trust with the channel.
“An accessible, intuitive mobile app has benefits for both the grocery retailer and the consumer. If managed and delivered appropriately, it can lead to even greater trust being developed between the parties,” Clifford said.
Written by John Kennedy (firstname.lastname@example.org)
Published: 13 August, 2020