Protecting the privacy of Gen Z consumers online

The protection of Gen Z consumers in digital spaces is a matter of utmost importance. In today's digital landscape, it is not only the online connections young people make that raise concerns, but also the potential exploitation of their data by large technology companies. Recent instances of Microsoft, TikTok, and Meta facing GDPR fines due to inadequate protection of young people's data underscore the insufficiency of efforts by Big Tech to safeguard the next generation of consumers.

Compounding this issue is the complicity of retailers. Prominent UK retailers like JD Sports and Sports Direct, with a predominantly Gen Z consumer base, are notorious for their extensive use of invasive cookie trackers.

To address this problem, retailers must learn from the failures of Big Tech to enhance data protection and avoid the risk of losing a significant portion of their customer base by neglecting privacy concerns. Gen Z consumers are discerning and consciously disengaging from brands that do not prioritise their privacy, as evidenced by 50% of young shoppers actively distancing themselves from such retailers.

However, what does this adaptation entail, and how can retailers strike a balance between personalization and privacy? By regarding privacy and consent not only as a competitive advantage but as an ethical imperative, retailers can safeguard young consumers and cultivate trusting relationships with them.

The consequences 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 everything’ 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 $392M, Meta was fined £405M for violating child privacy around non-consented location tracking and this summer OpenAI was sued £3 billion for using all the information available on the internet to train their Large Language Models (LLM) models without consent.

The damage the casual attitudes shown by Big Tech companies cause 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.

Empowering consumers with ownership

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 on 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.

Employing new approaches to reestablish trust

Building trust with consumers is paramount, and retailers can foster this trust by embracing transparency regarding their data collection, usage, and storage policies. It is crucial for them to provide comprehensive information about the type of data they collect and how it is utilised.

Moreover, retailers must actively seek explicit consent from users for data collection and ensure that they have clear options to opt in or out of specific data processing activities. Respecting user preferences and empowering consumers to actively control their data choices not only reinforces trust but also demonstrates a retailer's unwavering commitment to ethical data practices.

Another avenue to establish trust is for retailers to actively pursue independent certifications and assessments of their data handling processes. Such initiatives show consumers that a retailer has undergone external scrutiny and is dedicated to upholding data protection and ethical principles.

While Big Tech has faced scrutiny for its handling of data, retailers should not escape similar scrutiny. If retailers genuinely desire a more ethical future regarding data management practices, they must learn from the failings of Big Tech and take proactive measures to safeguard the privacy of young consumers. Retailers should bear the responsibility to meet consumer demand for better data handling practices.