The value of data for businesses is unequivocal today. In perhaps no industry is that impact greater than it is in retail. From global big box giants to high street independents, data surges through retail business, whether pure play or omnichannel.

Retailers use it to understand and segment shoppers, analyse in-demand or overstocked inventory, understand their best-performing marketing channels, and tie every facet of their business, from front of house to stockroom, together in one central strategy.

However, as more and more data is collected, analysed and stored online, threats to it increase. Privacy breaches have been increasing in severity and regularity in recent years. The Australian Cyber Security Centre (ACSC) received over 94,000 cyber crime reports in the 2022-23 financial year.

That represents one report every six minutes, with millions of Australians impacted. Evidently, data possesses great potential for retailers, but if – and only if – high priority is given to safeguarding it.  Trust is essential, and when achieved can drive major gains.

The business case for trust

Retail has felt the effects of softened consumer spending as keenly as any industry. As they attempt to grow against those headwinds, data-driven strategies and building customer trust have become two key foundations on which they’re doing so. They’re very much linked.

Data enables retailers of all sizes to paint detailed pictures of their shoppers, including what they buy, how often they shop, how much they spend, where they discovered a brand and more. That picture helps retailers manage their inventory, create sales forecasts, improve operational efficiencies, create targeted marketing campaigns and boost customer experience.

However, in order to do so, they must build trust about all else. As data breaches surge, consumers question why data collection is necessary in the first place. When retailers build trust and prioritise transparency, they’re better positioned to ease concerns, communicate the benefits and, therefore improve customer loyalty and retention.

Simple ways to build trust

Retailers enter the industry because they have a passion for, and expertise in, creating and selling products, providing experiences and cultivating relationships. Data privacy might not be a passion or a skill, but understanding and awareness have become a necessity.

Most issues arise not because a business has unscrupulous intentions, but because they weren’t aware of common dos and don’ts. There are many softwares, processes and policies retailers can and should implement, but here are a few straightforward ways to build that all-important trust.

Begin with transparency. A common mistake retailers often commit is failing to openly and proactively communicate their policy when it comes to data collection, use and storage. Customers value communication, and when retailers are forthright with what they’re doing and why, customers will be more inclined to consider the benefits for them, then opt in.

Then there are third parties, which have become a common cause of debate when it comes to data. The fact that so much data exists online is, in part, down to the propensity for businesses to sell it to third parties. Retailers should never share their customer’s data with third parties without following relevant local laws, like The Privacy Act 1988, and industry regulations. Trust is quickly lost – and hard to regain – by those who flaunt regulations.

Using trust and data as building blocks

Trust and data go hand-in-hand. When both are harnessed, retailers have an incredibly strong foundation to start or scale a business. Its collective ability to drive both customer acquisition and customer retention is crucial in enabling retailers to move forward in spite of economic headwinds.

They boost one another, too. When retailers build trust, and prioritise security and transparency, their shoppers will be more inclined to share their data. And when they have that data, retailers are better placed to provide personalised experiences that enhance relationships and boost trust.

So in 2024, retailers should identify ways to leverage data. By combining approved customer data with the sales data that flows through a POS system like Lightspeed, they can create deep insights into their customers. For example, in their data are the insights to tell them that Shopper A is a high-spender who might value early access to an exclusive range, while Shopper B hasn’t returned for a while so might enjoy an offer on a product they once bought regularly.

These personalised, data-driven strategies are far more effective at incentivising loyalty and building relationships than one-size-fits-all tactics. Data is significant internally too. For example, if retailers have high traffic to their site but limited conversions, it could be a sign that they need to reconsider their pricing or make their online store and checkout easier to navigate.

As a retailer, if it’s good for your customers, it’s good for your business. When data is collected, stored and used with trust underpinning every stage, the value it can provide customers is undeniable. For retailers, the combination of both can be a bridge over potentially uncertain waters in 2024.

Andrew Fraser is managing director for APAC at Lightspeed.