1. Comment
May 1, 2018

GDPR requirements will transform effectiveness of customer databases

The new EU GDPR (General Data Protection Regulation) law comes into effect in less than one month and though retailers are likely to lose a significant chunk of customer data as consent requests are ignored or refused, the result will be an engaged, responsive shopper base which the retailer will be able to learn more about and target effectively.

By GlobalData Retail

The new EU GDPR (General Data Protection Regulation) law comes into effect in less than one month and though retailers are likely to lose a significant chunk of customer data as consent requests are ignored or refused, the result will be an engaged, responsive shopper base which the retailer will be able to learn more about and target effectively.

Tighter guidelines around the use of personal data are clearly essential given the increased use of the internet since the legislation was previously set out in 1995, as well as the rise of high profile data breach cases including the recent Facebook / Cambridge Analytica debacle. However, ensuring compliance with stringent rules requires time, money and resource – none of which most UK retailers have available, despite being made aware of impending changes two years ago.

As consumers have continued to hold back spending on non-essential items, retailers have trudged on through a difficult year where weakened demand coupled with rising operating costs has led to mounting pressure on profits and a number of high-profile players tumbling into administration. The upcoming enforcement of the evolved data protection guidelines on 25 May 2018 will have put further strain on retailers who will be obliged to be more transparent about the consumer data they hold. The maximum fine threatened for non-compliance is 4% of annual turnover or £17.4m (€20m) – whichever is greater, and if sanctioned could lead to the collapse of a retailer that is fighting to generate every pound of its profit.

As well as the setback of additional costs, retailers must also be prepared to lose a sizeable proportion of their customer database as subscribers ignore communication to opt into marketing messages or choose to take the opportunity to opt out in order to declutter their inbox. A smaller subscriber base may reduce the scale of communication channels however retailers will be left with their most loyal and engaged customers which will lead to better conversion rates and a clearer indication of good and bad performing content.

Given the focus of their business, online pureplays with large tech divisions are likely to be the best placed to cope with this change considering their ability to quickly adapt. ASOS has so far been the standout retailer acting to address the requirements by requesting consent from its customers via clear messaging on both its website and via email. Multichannel retailers, though generally having a tougher time than their pureplay counterparts and less cash to spare, must invest in making changes to futureproof their companies as this issue will only become more prominent as consumers become more conscious of the use of their personal information.

For more insight and data, visit the GlobalData Report Store – Verdict Retail is part of GlobalData Plc.

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