Privacy: Don't be like Big Tech, protect Gen Z

Retailers can be as invasive as social media when it comes to tracking younger users

The safety of young people online is a critical issue. Nowadays, it's not just who young people are connecting with online, but how their data may be exploited by Big Tech companies that is a cause for concern. With Microsoft, TikTok and Meta all receiving recent GDPR fines for their lack of protection around young peoples' data, it's become clear that Big Tech isn't doing enough to safeguard the next generation of shoppers.

Retailers are also complicit in this problem. Brands such as JD Sports and Sports Direct are amongst the top retailers in the UK and have audiences composed of predominantly Gen Z consumers, yet are notorious for their use of invasive cookie trackers.

Retailers need to learn from the failures of Big Tech to improve this, and those that fail to adapt risk losing a huge proportion of their customer base simply by not putting their privacy first. Gen Z consumers are savvy and are using their agency to evade exploitative brands, with 50% of young shoppers saying they are consciously moving away from retailers that fail to put their privacy first.

But what does adapting look like, and how can retailers balance personalisation with privacy? By prioritising privacy and consent not only as a competitive advantage, but as an ethical requirement, retailers can protect young consumers and build trusting relationships with them.

The domino effect of collecting consumer data

In our tech-driven world, data is a resource. And as with any resource, who owns it and uses it is both powerful and political.

One of the biggest problems is the misconception that data belongs to the businesses that mine it, rather than the users from which it originates. One-click of a checkbox and companies like Meta believe and behave like consumers' data is theirs for the taking - even while privacy policies are almost deliberately opaque and consumers are oblivious to the huge amounts of personal data that's being collected. With Meta amassing more than 3 billion users across its family of apps, it's an incredible amount of power to wield.

Added to this, you have Big Tech's ‘move fast, break things' mentality - innovate and think about the consequences later. Regulators are now attempting to impose those consequences and ethical considerations: last year, Google settled a privacy lawsuit for non-consented tracking at $392 million, Meta was fined €405 million for violating child privacy around non-consented location tracking and this summer OpenAI was sued for £3 billion for using all the information available on the internet to train their Large Language Models (LLM) models without consent.

The damage caused by the casual attitudes shown by Big Tech is huge, and a fine after the fact won't fix it. There's the short-term impact where the black box data set used to train the algorithm can profile individuals incorrectly, showing them harmful content on TikTok and Instagram. Then there's the long-term impact. Non-consented location tracking is the tip of the iceberg - an exploitative power dynamic that puts businesses on top and has serious implications for the spread of misinformation, lack of transparency, threats to geopolitics and even war. Big Tech might not intend these knock-on effects, but the series of data scandals creates an environment where consumers don't feel safe online.

Retailers are not immune from criticism

Big Tech's failings are retail's problems too. In an era dominated by technology, where data is the new currency, it's imperative that online retailers understand and address the ethical implications of collecting young people's data and prioritise their protection.

At the heart of this is a fundamental shift in the way we view data, seeing it as consumer-owned, not business-owned. It's an approach that acknowledges individuals have the right to decide how their data is used, shared and stored, giving them ownership and control over their data and ensuring their privacy preferences are respected. For retailers, this involves avoiding the use of cookies, refraining from holding customer data, advocating for transparency and when young consumers (or those of any age) don't completely grasp the idea of protecting their own privacy, stepping up to safeguard it for them. A consumer-owned approach means retailers can still use data to offer a personalised, seamless customer journey but within a respectful way without hurting consumers in the process.

Embracing the concept of consumer-owned data also means embracing privacy by design. This is where businesses, such as retailers, design their systems and processes in a way that minimises the collection and storage of personal information, reducing the risk of potential data misuse and leakage. This approach ensures that privacy considerations are embedded into a retailer's operations, not awkwardly or ineffectively added as an afterthought.

Privacy concerns are actively shaping shopping behaviours too. McKinsey research shows that 53% of consumers will make online purchases or use digital services only after making sure that the company has a reputation for protecting its customers' data - this rises to 58% among millennials and Gen Z. And over 50% of millennials and Gen Z consumers will often or always consider another brand if the one that they're considering purchasing from is unclear about how it will use their data.

Adopting a consumer-owned data approach, therefore, allows online retailers to establish mutual trust with their customers and differentiate themselves as ethical providers in the marketplace. Over time, this will attract privacy-conscious shoppers - especially younger shoppers - who value their personal data and seek to engage with brands that share their values.

Restoring trust by taking steps to protect young consumers

Trust is built on transparency, and retailers can establish trust by being clear about their data collection, usage, and storage policies. They should provide detailed information about what data they collect, how they use it, and the security measures they have in place to protect it.

Retailers should also seek explicit consent for data collection and provide clear options for users to opt in or out of specific data processing activities. Respecting user preferences and empowering consumers to make active choices about their data reinforces trust and demonstrates a business' commitment to ethical data practices.
Another way to establish trust is to seek out independent certifications and assessments of data handling processes. This demonstrates to consumers that a retailer has been independently reviewed and is committed to data protection and ethical practices.

Big Tech has been under fire for its handling of data, but retailers should be subjected to the same level of criticism. If retailers want to create a more ethical future in terms of data handling practices, they must learn from the mistakes of Big Tech and take steps to protect the privacy of young consumers. Consumers deserve a better way of handling data, and retailers have a responsibility to meet that demand.

Angel Maldonado is CEO of Empathy.co