UK retailers are seeking to address data security concerns with meaningful action to protect their businesses as they look to better technology and use of big data to drive growth.
According to a new report by leading business law firm DWF, retailers cited cyber and data breaches as the third largest threat to future growth. Around a third (32%) of respondents said it was one of their top three concerns, just behind IT systems (38%) and Government and EU regulation (40%). Unsurprisingly, respondents were almost unanimous in agreeing that data security is imperative for their brand reputations.
A survey of 150 senior executives from leading retail organisations found that technology is their joint biggest focus for the next three years and was considered a top priority for 51% of respondents. More than a third (35%) are looking at how they can make the most of big data to know more about their customers and bring them better and more personalised shopping experiences.
“The retail sector recognises that successful growth requires continued investment in omnichannel routes to market, but high profile incidents of hacking and online security breaches have meant a renewed focus on how to prevent breaches over the last few months,” said Alan Owens, head of technology and communications at DWF. “Big data can open up exciting new opportunities for customers and brands, but only if businesses learn from recent history to mitigate the risks. With tighter European regulation of data security coming in this year, failing to do so could be met with a high financial, as well as reputational, cost.”
Other findings suggest that retailers will have to manage these investments carefully. They expect value for money to continue to be their customers’ main motivating factor when making buying decisions, with 61% putting pricing as one of their top two anticipated customer demands.
Loyalty programmes were in second place (32%), suggesting this customer incentive may see a renaissance in the coming years despite the value of schemes such as Tesco’s flagship Clubcard being brought into question recently. However, the high penetration of smartphones is creating opportunities for innovation in this area. This is being matched by retailer investment in data analytics, with 89% planning medium to high investment in analytics to improve the customer experience, and 85% planning medium to high investment in analytics for marketing and sales.
Hilary Ross, head of retail, food and hospitality at DWF, said: “Many high street retailers are looking to invest in in-store technology to improve the customer experience – over 40% of their budgets will be dedicated to bricks-and-mortar stores. The key to success will be implementing these new IT systems without causing significant disruption, and building in privacy by design. Customers view retailers as the custodians of their data and one slip up can destroy that relationship in an instant”
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