UK less trusting of consumer-facing businesses than 3 years ago
As consumers and businesses become more reliant on technology, they are also feeling more exposed to risk. According to a new report, UK consumer attitudes indicate levels of trust relating to the use data collection and data use by consumer-facing businesses is now lower than it was three years earlier.
A revolution in digital technology has helped businesses to connect more directly with potential customers than ever before, via a cornucopia of new platforms for engaging with them, or alternatively by creating new channels through which to market and sell items. At the same time, the digital transformation of modern consumerism has simultaneously created new avenues through which customers can to shop for and engage with brands. The changes wrought by digital transformation have both allowed agile new start-ups to compete with established market incumbents, who in response have also developed new business models to cater to this changing consumer behaviour.
According to a new research paper by Deloitte, titled 'Risky business: Keeping up with the changing consumer', while digital transformation can improve the efficiency of operations and ultimately reduce costs, however, it comes with a new and unique set of quandaries which society, and capitalism, are both struggling to adapt to. The report from the Big Four firm, which analyses the opinions of more than 2,000 UK adults, contends that adopting new technologies often requires changing both the way that people work and the culture of an organisation, without which a number of risks, including cyberthreats and the misuse of personal data can emerge, while many businesses are left pondering how to identify, evaluate and mitigate such risks.
Perhaps the most alarming revelation of Deloitte’s study is that analysts believe technology is evolving at a faster rate than businesses and governments can manage. While the rate of change in technology has always led change on the individual, corporate, or government fronts, the digital era has seen this gap accelerate dramatically. In the business sense, this has resulted in shortening product lifecycles and challenging investment cycles and IT ‘roadmaps’, while with regards to individuals, many are left unaware of just how technology might be leveraging their data and information for interests entirely unbeknown to the customer. At the same time, public policy has struggled to remain abreast of the latest technological changes to regulate this potential use or misuse, leading to regulations which struggle to keep pace with the corporate use of technology broadly leaving consumers under-protected.
An example symptomatic of this is the recent news that Facebook would face a mere £500,000 fine by UK authorities for its part in the Cambridge Analytica scandal. Britain’s Information Commissioner Office (ICO) announced the global firm would be hit by the maximum amount possible according to the UK’s Data Protection Act, which first came into force in 1998. The social media behemoth, which raked in revenue of £500,000 every five and a half minutes in Q1 2018, could have faced a much more severe punishment had the debacle come to light months later. In that case, the ICO would have likely been able to call on the European General Data Protection (GDPR) to issue a far more severe blow, with the GDPR famously capping fines at the higher level of £17 million (€20 million) or 4% of global turnover – depending on which is largest. In Facebook’s case, 4% of global turnover amounts to a colossal £1.4 billion ($1.9 billion), demonstrating just how costly the sluggish adaptation of public policy has been in regard to holding coporate interests accountable for their use of digital technology.
Lack of trust
As a result, in the three years since Deloitte last explored the misuse of data, levels of consumer anxiety regarding organisations either holding or having access to their personal data has risen significantly. Following a number of high profile incidents which have been widely reported in the media, this comes as little surprise, particularly in regard to concern about social media companies and individual political parties, which could hold and access to the data of consumers, targeting them with tailored messages in an indirect and often unaccountable manner. Since 2015, the number of consumers who know how to control the level of data or information available about them online has slumped below half. After a 3% fall, now just 48% are confident of this matter.
At the same time, a number of expectations have risen dramatically with respect to the security measures employed by firms when holding the data of customers. On this front, nine in every 10 consumers now believe that companies should be taking more drastic action when handling their data. 90% expect companies which collect or process personal details or financial transactions online to refrain from sharing this data with third parties unless they request my permission to do otherwise, while 91% expect such firms to keep this data secure from criminals. Above all, 92% suggested that companies have to be held responsible for ensuring the security of user data and personal information online – suggesting a rising inclination that, to this point, they have not been, or could have done more to be responsible.
What may come as a surprise, and potentially gives a beleaguered sector further cause for concern in 2018, is that for consumer businesses, there is a major level of mistrust shown towards retailers and brands. Two-thirds of consumers are now concerned about online retailers having access to their data, in stark contrast to just 54% in 2015. At the same time, 67% noted growing concern at brands having access to their data, a 21% boom on the 46% in 2015. On top of this, three-fifths of consumers told Deloitte they are concerned about supermarkets holding or having access to their data compared to just 41% in 2015. This could have key ramifications for the likes of AR experiences in stores, which some fear could be used to monitor shoppers, while consumers are also growing increasingly concerned about travel agents, hotels and airlines having access to their data.
The survey will present the retail and consumer goods sector with a major headache going forward, as the market attempts to reinvent itself, following a sluggish 2018 in which multiple long-standing brands in the UK have faced administration or issuing profit warnings. Digitalisation is often thought of in the sector as a kind of silver bullet for its problems, with firms emulating e-commerce players in a bid to turn around poor sales figures. With the levels of distrust aimed at digital retail, however, this transformation could be compromised, and its true potential never realised, should companies fail to remedy their perceived image problem.
According to Deloitte’s study, while the data suggests that consumers have lost trust in businesses, their new found awareness of the value of their data and how it is used, should be viewed as an opportunity by many consumer businesses. Indeed, in light of GDPR, many organisations have already begun to overhaul the methods they use to communicate with consumers about the use of their data, with the resulting transparency over data collection and usage likely to have started mending damaged relationships with the public. Meanwhile, new companies with strong ethical credentials are likely to receive a boost to business, using this appetite for transparency to fuel a rise to prominence, helping to change perceptions of business in the digital age as a whole.
The report concluded, “Rebuilding trust with consumers will become a key priority for the majority of businesses. Those businesses that embrace this challenge and show their consumers that they have their best interests at heart have the opportunity to build longer term loyalty. In addition to the changes in terms of marketing communications and culture, the issues we have highlighted over privacy could also drive innovation. With consumers more aware of the value of their data, we believe this will stimulate competition between consumer businesses to produce innovative goods and services that make the best possible use of personal data.”
