The Dark Side of Real-Time: Privacy Concerns and Ethical Dilemmas in Retail

The retail sector's increasing use of real-time data analytics is a double-edged sword in our privacy-first world.

On one hand, it is a promising new revenue opportunity that leverages what retailers, by default, can already access. On the other, it is a potential threat to consumer privacy and increases reputational and regulatory risk for the retailer.

The era of the privacy-conscious consumer

It’s an issue that is gaining momentum worldwide as consumers become increasingly privacy conscious. In fact, 88% of online shoppers in the UK say they would stop using brands and organizations that don’t value consumer data privacy. This means that any breach or data-loss issue could be hugely damaging to the brand’s reputation. Global research suggests that one in three customers will cease buying from companies that have suffered a security breach.

Concerningly, the retail sector is a prime target for cyberattacks. According to reports, in 2022, retail faced 24% of all attacks, more than any other sector. Retailers are a veritable goldmine for personal information, creating another tightrope retailers must walk.

For example, in 2022, The UK ICO (Information Commissioner’s Office) found that Easylife, a catalog retailer, had built profiles of 145,400 people for inferred health conditions without their consent. This resulted in a £1.5 million fine for data protection and e-marketing violations. Even the world’s biggest retailers are not immune. In July 2021, Amazon was found to be tracking users’ data without acquiring appropriate consent from users or providing the means to opt-out of this tracking and was fined £636m.

Right data, right place, right time

Beyond the reputational impact and monetary cost in terms of fines, the frequency of data breaches completely undermines the drive for personalization, which is synonymous with shopping today. According to Accenture, 91% of consumers want a personalized online shopping experience, but in order to deliver this, retailers need access to first-party, consented customer data in real-time.

Access to real-time data is also fundamental to addressing the challenges posed by payment fraud, identity theft, and return fraud. It can detect unusual patterns and transaction anomalies, providing early warnings to prevent potential fraudulent activities and safeguarding the business and customers — but only if the appropriate architecture is in place to ensure the right data is in the right place at the right time.

A huge opportunity for retailers

Retailers need a data platform that enables them to build versatile, reliable, and cost-effective solutions that make a tangible difference to the customer experience while keeping data secure. A platform that is quick to deploy can enable internal teams to innovate instead of fighting fires of maintenance and upgrades. This is where open source software (OSS) is key.

OSS offers an opportunity for retailers to access a vast talent pool to build effective solutions, all while enjoying the freedom to use multiple clouds, just like our customer, La Redoute.

La Redoute: Improving data control to free up team time

E-commerce giant La Redoute needed to migrate its data infrastructure. With over 10 million customers across 26 countries, digital innovation was key to its success. They experienced a huge increase in sales post-pandemic and with it, a need to securely store and manage large amounts of data. Leveraging the Aiven Platform, La Redoute seamlessly transitioned to our Bring Your Own Cloud (BYOC) deployment model - a self-service solution that unlocks the ability to leverage innovative, cloud-native data platforms from specialized third-party partners while optimizing cloud economics - and saw huge improvements in its security team. Diogo Gomes, head of cloud transformation said, “The team used to have a traditional DBA mentality and was spending up to 90% of the day doing maintenance, patching and upgrades. That’s all handled by Aiven now, freeing up the team to focus on business projects and delivering solutions much faster. We can deploy databases in minutes rather than weeks”

Deliver sustainable long-term growth

Balancing the need to become more data-driven and preserving customer privacy is a complex issue that requires careful consideration from businesses. While analytics can help retailers gain valuable insights into customer behavior and preferences, collecting and using personal data can also pose serious privacy risks.

Achieving the right balance can build trust with customers, enhance brand reputation, and deliver sustainable long-term growth.