• May 3, 2022
  • By Ismail Amla , executive vice president, professional services, NCR Corp.

How an Open Standard for Data Sharing Benefits Retailers and Consumers

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Laws like the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act mandate that companies give customers more control over which data is retained and how it is used. Web 3.0 is building an entirely new foundation for digital activity that includes the capability for smart contracts that could be used to allow consumers to better control who can collect their data, how it can be used, and for how long. Thanks to cloud computing, 5G connectivity, widely used open-source software, and cheaper hardware, the costs and time required to deploy data collection and management infrastructure is plummeting.

This is enabling retail technology providers to deliver more sophisticated data collection and handling capabilities as a service with little to no upfront cost or capital required of retailers. In response, more retailers have become digitally savvy and are eager to embrace the benefits that good customer data brings to brands and their storefronts. What remains lacking are accepted frameworks and standards for data sharing that retailers can agree upon in building out their systems. These frameworks and standards would also enable startups or third-party intermediaries, like NCR, to create customer-friendly applications and interfaces to receive offers and control how their data flows, to whom, and for how long. There is lots of work to be done, but we as the retail community have a rare opportunity to embed Web 3.0 values into our customer relationships and truly, finally, put customers first.

A Complete Digital and Physical Bridge Is Fast Approaching

Today, dozens of startups like Grabango are making advanced collection of customer data viable and cost-effective for a far broader pool of retailers, allowing them to bridge physical and digital worlds. This bridge has long been a Holy Grail of the big brands and the powerful retailers alike. In the not-so-distant future, it is almost inevitable that all the major POS and retail technology vendors will deliver this type of functionality, as a service for a relatively affordable monthly rate. The result will be a huge increase in the type and volume of data collected about shoppers, but unlike Web 2.0, that data will be decentralized and owned by a cacophony of brands.

A Golden Opportunity to Restore Customer Data Agency

Like the blind men and the elephant, retailers today all see partial pictures of consumers because they are fighting over who collects and owns the data. These retailers are also at a massive disadvantage to organizations upstream, such as Google, Apple, and PayPal, which have a much broader view of customers. The very largest retail brands—WalMart and Amazon—recognize the value of data and are leveraging their scale to grab as much customer behavior and intent information as possible. In other words, most retailers operate at a perennial disadvantage to giants of the field.

The adage here holds true. If the game is unfair, then change the rules. Specifically, if retailers can band together and promote a different system, where customers themselves own and control their data, then the advantages of scale would be somewhat muted and other values, such as trust, might play a more important role. By flipping the paradigm and giving customers agency over their data, retailers might gain a complete picture of shoppers without violating their privacy or requiring uncomfortable semi-covert data collection activities.

Here are some ways that might work:

A Standard for Customer Data Format and Exchange

To date, retailers all collect data about customers in different fashions and formats, with technology systems that cannot communicate. This is a textbook example of where a technology standard might do a world of good. A widely accepted and adopted standard format for customer data would reduce obstacles to technology adoption and make data more valuable by making it easier to share and analyze.

Merchants Bidding for Access Privileges

While this might appear to give the advantage to the big brands, it would also let brands place a real value on customer affinity they create. For example, customers would be more likely to allow brands they love to pay less money than brands they dislike to access data. Such a system would also allow customers to revoke access and remove their data from companies they no longer wish to associate with.

The upshot? Companies might have to work harder to earn customer trust, but the exercise becomes less about technology at scale and more about delighting shoppers.

An Anonymous Pool of Retail Data Cohorts

Another solution might be to collect customer data in a standard format but only release it in anonymous cohorts of a minimum size (1,000 people might be a nice round number). Customers would be asked to contribute their data and would be rewarded in some fashion—perhaps with discounts, perhaps with cash back on purchases. Their behavioral data would go into a pool that retailers could query but only at a certain level of granularity. While this might prevent micro-personalization, it would still afford retailers the ability to tailor offerings closely to appeal to specific shoppers, if the total number of shoppers contributing data was sufficiently large.

Approaching the customer data issue from this tack would more aggressively preserve privacy and allay fears that sensitive behaviors might be tapped for marketing efforts that offend or reveal too much.

A New, Open Retail Way to Build Data Flow

Creating an open data standard and the technology mechanisms for customers to control and sell or permit access to their data will require both considerable work and considerable cooperation. However, this is a golden opportunity for retailers to break the hammerlock of the big players, to better leverage their existing data, and to treat their customers better, by giving them control. From a Tower of Retail Babel, we can build a Rosetta Stone that benefits all, if we together as an industry can only dream and think big enough and create a common format  that sustains all and benefits all sides.

Ismail Amla is executive vice president of professional services at NCR. Amla is responsible for the strategic direction and execution of NCR's global professional services business, delivering technology strategy consulting for the banking, retail, and hospitality sectors and technology implementation services covering platform integration, data analytics, AI, cloud, security, and customer experience. Prior to his role at NCR, Amla served as chief growth officer of Capita and has also served as managing partner for IBM’s Global Business Services in North America, CEO of Capco North America, and a senior partner for Accenture, where he was a member of the Accenture U.K. leadership team.

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