The Rewards of Sharing Your Consumer Data.
Alexander O’Reilly-Carr , 13/12/19 , GBC College — Lemonade
Consumer Data Analytics and Its Impact on The Fashion Industry
Consumer data is a vital resource for fashion retailers that want to be successful. Consumer data is typically statistics about a consumer as they interact with a retailer and their products. Retailers are constantly analyzing consumer data for new ways to engage consumers and match their preferences. The modern retailer in North America is concerned with designing a brand that affords to give customers the very best experience every time they interact with said retailer or their products. Retailers use data to spot trends about who their customers are and their trends while interacting with their, products or locations. This retail spaces can be modern web retailers, traditional brick and mortar or a mixture of both. The trends that correlate with positive experiences and more sales are typically the trends successful businesses like to follow. Many consumers are often skeptical about the benefits of giving out their information. The fashion industry often collects or purchases data about its consumers. The fashion industry collecting and analyzing consumer data is beneficial and should be embraced by North American Consumers. Personal data collection by retailers is beneficial for the following reasons:
- Data shows that consumers say they care about privacy and voice their concerns but at the notion of receiving some form of reward give up their information willingly.If consumers are willing to give away their data the fashion industry is obligated to use that information to create a better customer experience with their brand.
- Financial data helps the consumer have access to resources they otherwise wouldn’t have without participating. Resources such as credit cards, loyalty points, rewards, mortgages, transportation etc. Information such as, Income, employment history, Bank statements, spending habits all fall under financial consumer data. This data helps credit retails grant consumers funds and aids product consumption. They have the money and membership all consumers have to do is provide the information that clarifies that you meet their standards. It should be noted that the financial collapse of 2007–2009 was caused by banks not properly knowing their consumers and giving out mortgages to individuals that had not proven they were capable of paying them back.
- The fashion industry collecting data on consumers makes for a more personal and interactive shopping experience. Products are produced better to match the consumers needs and sold more efficiently in personalized retail spaces. The consumer is starting to create their own retail space by having the tool to interact with smart retailers like never before.
Power & Privacy
There are plenty of fashion websites that offer access to an astronomical amount of data for a couple of small tidbits of information about the consumer. For the American Council of Consumer Interest, Norberg et all explains that retailers seek to maximize the resource that is consumer data. Consumers often voice that they have privacy concerns and are unwilling to share a large amounts of their data. The truth seems to be the opposite of what the consumers voice as studies show much data is given freely to the fashion industry. This is the privacy paradox that Norberg et all explains. The reason that consumers share their information is simple. Consumers want access to more funds and more information. Consumers seem to forget what they stand for when it comes to privacy when they need only to provide a small amount of information to have access to these things. This seems to clearly point to what is more important for consumers.
“It is likely that economists and others would utilize an exchange framework to posit that the information the consumer receives from the Web site in this example is clearly of greater value than that of the information provided by the consumer to the site.”
The Cost of Compromising Data
I’ve already established that consumers will share their information despite voicing that they have concerns about their privacy. This is not to say that consumer privacy is not important. My article pertains to the fashion industry. Facebook advertises a variety of products and brands under the umbrella of the fashion industry. Therefore I’ll be using the retailer Facebook as a case example. In the article Facebook Lite Takes Social Media Back to The Basics written on Digital Trends Stolyar’s details the consequences of what happens to a big data company when they abuse the data they have collected with the idea that it would be protected from their consumers. Facebook lost the confidence of its users when word spread that it had sold documents containing millions of users usernames and passwords in plain text. Facebook was fined $6 Billion by the America’s Federal Trade Commission for sharing the open text document with buyers. Facebook must now report quarterly to the FTC about its independent privacy commitment. Overall I believe this was a positive stepping stone for consumer data privacy in years to come. Before this case the consequences and expectations about giving out consumers data was not clear. The case against Facebook created a dialect for the expectations that retailers need to follow when being in possession of large quantity of consumer data and the consequences for not acting in good taste. Justice being served to Facebook shows how powerful the consumer is in this relationship and that data sharing needs to be approached with respect for the consumers privacy. Legislation and case studies like Facebooks have become pillars of privacy for consumers and their data. Consumers can sleep better knowing that institutions like the FTC are regulating how retailers protect their information.
Loyalty and Reward
Some providers offer a multitude of different systems for which the consumer provides their personal information and shopping habits in exchange for tangible rewards. These are usually called Loyalty programs and offer incentives for consumers to purchase certain brands or use a financial provider for their transactions.Stein’s article Data Mining: How Companies Now Know Everything About You, Time magazine he explains, that if we are a digital consumer most of our information already exists on the internet and is easy to access. He shows this by contacting a specialist that people use to see what information is available about them online. These are people, who usually who want to stay out of the public eye. The specialist digs up all kinds of information about Stein in a short hour. Information that Stein had given out freely on the web. Stein later goes on to explain that much of this information is worthless to us and is a great exchange for programs that offer incentives to consumers such as loyalty programs.
Consumers sharing their shopping habits data can be exchanged for flights, hotels and accommodations that they may not have been able to afford otherwise. In exchange for their information consumers can apply for credit checks which may grant them credit cards. Access to funds the consumer previous didn’t have. Once consumers use their information to gain access to a credit card their opportunities are further multiplied because many cards offer rewards programs that can be used towards a variety of offers. The consumer gains rewards while the credit card companies collect data. This data can then be sold to the fashion industry to predict trends.
Fashion retailers broadcast these trend predictions to consumers via advertisements for new products. Consumers may enjoy these advertisements. They also get to gain insight to the newest trends and products they may want to purchase that they may have otherwise not known about. The fashion industry is constantly becoming more effective in providing the best customer experiences because of the insight they are gaining from collecting consumer data.
“The vast majority of it, though, is worthless to us and a pretty good exchange for frequent-flier miles, better search results, a fast system to qualify for credit, finding out if our babysitter has a criminal record and ads we find more useful than annoying.”
Deep Learning
Advancements in mining data means fashion retailers understand the customer more than ever. A better experience for the consumer creates more revenue for the retailer. The retailer then has more assets to spend on researching trends and consumer needs. This creates an ecosystem for continually improving customer relations. Retailers want to continue to produce the best experience for consumers. This is only possible through data analysis. Barlow’s article, Artificial Intelligence Across Industries, published in O’Reilly Library. Data analysis can be seen as the backbone for trends, visuals, product placement, product design features and employee training. Presented effectively, all of these can result in better customer experiences. Data and profit for the fashion industry go hand in hand. Profit is generated in the marketplace by positive customer experiences with the retailers, their staff and their products. Tech is the big emerging channel for data collection and its becoming very personal.
“Smart retailers are using big data analytics along with machine learning and deep learning techniques to understand customer behaviour and offer choices that will result in more sales and higher profits.”
Consumer Engagement
As digital tools become ever more a part of consumers lives so too are they becoming more used by retailers to collect data in some interesting ways. Big data and AI are used to understand our behaviours. Looking at Calienes et al article, Inside the Mind of The Millennial Shopper, Designing Retail Spaces for a New Generation written in the Journal of Interior Design and published by Wiley online library. This journal entry details a study where millennials were prompted to take and edit pictures of various retail environments. Instead of relying on how consumers interact with retail spaces, consumers are given tools from retailers and encouraged to be creative with them. This is a powerful way for retailers to collect data because there is no limit on what the consumer can create using a phone camera, emoji’s, text and digital paint. Fashion retailers that encourage smartphone use in store engage the customers in product displays like never before. These relationships with smart technologies and customers are creating retail experiences that make it worthwhile for new generations to continue to shop at brick and mortar. The implications of having a retail space worth posting about is free advertisement to however many people subscribe to that individual. Some of these consumers may not have been able to be reached by the retailers through their traditional marketing practices.
“This image bank revealed tangible and intangible dimensions of the retail experience that offer insights into the mind of the millennial shopper. The identified themes have design implications for both education and practice that can inform the process of creating dynamic, engaging retail environments for this generation.”
Conclusion
The fashion industry collecting and analyzing consumer data is beneficial and should be embraced by North American Consumers. Personal data collection by retailers is beneficial for reasons that Data shows consumers say they care about privacy and voice their concerns but at the notion of receiving some form of reward give up their information willingly. Financial data sharing helps the consumer have access to resources they otherwise wouldn’t have without participating. Retailers collecting data on consumers makes for a more personal, interactive shopping experience. The foundation of credit card approval, mortgages, insurance, and business as a whole is based on data. The extent to which the consumer is cashing in on their data is very minimal and could be higher. Some individuals have made it a living to transition from consumer of one specific channel to provider. Being a retailer from the palm of your hand or your coffee table has never been easier. Big fashion retailers need to always be improving customer relations to stay competitive in this market. Data is a map for how they can improve. Privacy is often a main concern when discussing data. Legislation and control are becoming pillars of privacy. The fashion industry has transitioned from a need to know retailer market place to a need to know consumer market place. Data will continue to power trends and customer experiences for the North American fashion industry. Consumers should perceive their data as valuable and share their information so they can reap the rewards and help the fashion industry understand how to tailor better to the consumers needs.
