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February 11, 2022

Customer Loyalty in Apparel: Regulatory trends

Players in apparel retail are now better able to collect consumer data and devise personalised methods of engaging and inspiring customer loyalty. The aspects of values and ideals of a business, for example, sustainability in the supply chain and privacy of customer data, are also attracting the younger population in particular.

Listed below are the key regulatory trends impacting the loyalty programmes run by apparel retailers, as identified by GlobalData.

Data privacy

Introduced in May 2018, the General Data Protection Regulation (GDPR) aims to protect and empower European Union (EU) citizens’ data privacy and protection. GDPR forces companies to hold sensitive personal information for the shortest time possible and allows EU citizens to demand insight into what information companies have about them and whether it is being shared with third parties.

The new regulations have implications for loyalty programmes run by retailers as these programmes collect large amounts of personal data. Thus, retailers must ensure that they are compliant with GDPR or risk significant financial penalties. As per the policy, retailers can only use customer data for the purpose mentioned when it was collected. Another aspect of the regulation is using encryption to store information to make it obscure for hackers in case of a breach.

Since GDPR was passed, other countries, including Argentina, Australia, and Brazil, have moved to implement similar rules. In the US, the need to have a federal law on data protection gained traction, after the state of California enacted the Consumer Privacy Act (CPA) which came into force in 2020. Faced with the prospect of strict regulation, US tech companies are pre-emptively supporting federal legislation that would overrule the CPA.

Since the enactment of California’s CPA, states such as Colorado, Maine, Nevada, and Virginia signed their respective consumer privacy acts, while the laws of states such as Massachusetts, Minnesota, New York, North Carolina, and Pennsylvania are in committee, pending approval.

This is an edited extract from the Customer Loyalty in Apparel – Thematic Research report produced by GlobalData Thematic Research.