Why Retailers Must See GDPR as a Blessing, Not a Curse

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2Q 2018 | IN-5134

As Europe enacts the GDPR, retailers worldwide will need to align their systems and strategies in preparation. Constant vigilance over data usage will be required and both e-commerce and brick and mortar retailers will need to incorporate this as a strategy for retaining customers.

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The Final Countdown


With less than a month until the General Data Protection Regulation (GDPR) is enacted in Europe, retailers are scrambling to get their data strategies ready for the big day. Starting May 25, 2018, consumers will be given the right to order companies to delete, edit, or export any personal information relating to them. This is great news for the privacy-conscious consumer, but for some chief data officers and their teams, it is proving a daunting task.

GDPR is not just a concern for European retailers. Any company, regardless of its location, will be subject to the regulations if any of its customers are European Union (EU) citizens. Failure to comply will result in substantial fines of up to 4% of annual revenue or €20 million (whichever is greater). The EU has accepted that the new regulations will require major overhauls of data practices for many enterprises and are, therefore, expected to demonstrate a certain degree of leniency in the initial phase of enforcement.

What This Means for Retailers


In the short term, GDPR will be a steep learning curve for retailers who rely heavily on the deep insights they gain from customer data. Such a fundamental change to what companies can and can’t do with personal information will have a profound effect on the retailer/customer relationship due to the increasing difficulty to gather and process data.

The resource-intensive process of preparing for GDPR is another major concern for retailers. Compliance requires a serious rethink in terms of Information Technology (IT) systems and strategy, with many enterprises already investing heavily in new technologies and service providers. This poses a significant problem for the seemingly expanding list of struggling retailers whose Capital Expenditure (CAPEX) budgets are shrinking. This further highlights how long-term digital strategies will underpin and define success in retail, as if further proof were needed.

ABI Research forecasts that e-commerce’s share of the retail market will increase to around 20% by 2022. GDPR can be considered a factor in this growth. Companies with a strong e-commerce presence will largely have effective data strategies in place because this is a major pillar for success. Brick and mortar retail, on the other hand, is only just coming of age as far as more advanced data strategies are concerned. Gathering customer data in a physical store has long posed a business challenge to retailers. Throw in the complexity of GDPR and it is easy to see how e-commerce can once again press its advantage over brick and mortar retail.

GDPR will become an ongoing concern for retailers for a significant amount of time. Retailers can’t simply become compliant and then forget about the regulations. Constant vigilance is required, given that companies can be held responsible for data breaches, which may not seem to be their fault. If data are lost, stolen, or misused because of third-party errors or even internal security breaches, the retailer is held accountable. Data and cybersecurity, as well as trust between enterprise partners, will be even more crucial.

Focus on the Opportunity, Not the Threat


The retailers with the best strategic roadmaps will be seeing GDPR as an opportunity to deliver a revolutionary customer data strategy, rather than simply a regulatory hoop to jump through. The legal changes do not necessarily make data-driven marketing and personalization harder to achieve. In fact, it can enhance these capabilities. Data service providers have been demonstrating how consolidating customer data, which is a GDPR requirement, can drastically streamline data management and even improve the insights available to retailers. The strength of the business case from a regulatory and marketing point of view now means that chief data officers have an undisputed mandate and healthy budget to enact widespread data reforms within the enterprise.

The rise of the data-savvy customer, as well as the potential for heavy fines, means transparency is key to GDPR success. Again, instead of seeing this as a burden, companies should regard this as an opportunity to drive customer loyalty. The retailers who openly demonstrate (and maybe even publicize) their good data practices and combine this with smart, yet compliant analytics will be those with the highest customer retention rates. Inappropriate data usage or loss has been proven to damage brand perception on numerous occasions.

Benefitting from GDPR will require several enterprise departments working in unison. Having marketing, IT, legal, and other crucial teams working in silos is not the way to achieve long-term success. A constant feedback loop is required between these departments. Some retailers have set up GDPR-specific task forces involving leaders across business functions, for example. This may remain a necessity long after the May 25 start date for many companies.

Brick and mortar retailers must not be excused for thinking that GDPR is an issue that only affects online processes. Instead, physical stores should be using GDPR as a catalyst for the data revolution occurring in-store. New methods for engaging shoppers in a brick and mortar environment are emerging all the time. Retailers with plans to survive the economic assault on the high street need to be tapping into this opportunity and GDPR represents the ideal place to for retailers to start, if they haven’t done so already.

This insight is part of ABI Research’s coverage of the Smart Retail sector. Upcoming related reports include AI, Machine Vision and Robotics in Brick and Mortar Retail (Q2 2018), and Customer Analytics in Retail (Q3 2018).


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