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Intrusion or Tool: Consumer Data’s Increasing Role in Retail
It’s no secret that retailers have access to more information about their target consumers than ever before. This information can help retailers not only to target their broad market but also to tailor the communications they deliver to each segment of that market. Customers, on the other hand, are increasingly concerned about what kind of and how much information about them is floating around in cyberspace. Likely in part due to this aversion, it appears most retailers try to be stealthy in their use of consumer data. Some retailers, however, have embraced the use of consumer data and have been open about their use of information about their targeted markets to inform specific decisions.
When Target wanted to establish itself as the go-to destination for expectant mothers, the company searched for a way to target marketing to expectant mothers early in their pregnancy. Data analysts were able to discern certain patterns that allowed Target to identify expectant mothers even before they went public with the news of their pregnancy. This accomplishment in data analytics was tempered by the fact that Target wisely assumed that expectant mothers might be confused and turned off by targeted coupons and mailers for baby products before that news had even been shared with family. Target’s solution was to slowly begin adding baby product coupons in the target customers’ coupon mailers but surrounded by other products that were completely unrelated to pregnancy or babies, making the targeted ads appear to be random. This way, Target was able to use the information it derived about its customers to offer individualized discounts while also avoiding “creeping” those same consumers out by knowing too much, too soon.
On the other side of the spectrum, Nike has recently opened a location in Los Angeles called Nike by Melrose, which is designed and stocked based on the preferences of the NikePlus Members in the community. New merchandise is stocked based on Nike’s digital commerce data, regardless of the overall seasonal merchandising plan for Nike as a whole. Nike by Melrose doesn’t hide the fact that it is completely data-driven, instead it is presented openly as an advantage. There are a few factors that may make this up-front approach more palatable to consumers. Nike by Melrose only uses data of Nike Plus members. This is a group of people with a demonstrated loyalty and relationship with a brand. From the outset, these customers may be more receptive to the fact that Nike is using their data to customize their shopping experience. In addition, the data appears to be derived from the customers’ usage of a specific app. The store also offers many amenities that can be booked through the app, such as a styling session or a product testing session on one of the store’s treadmills. Nike may be able to “get away with” their obvious use of data analytics because they have embraced it and made it just one part of an otherwise completely curated experience.
Many retailers may continue to pursue a strategy of sandwiching their targeted ads between seemingly random ads in order to make their use of consumer data analytics less obvious. Another approach may be for retailers to provide customers with special perks for being part of a smaller, targeted group. Instead of feeling like a breach of privacy, it can feel like an exclusive club when a retailer wants to know about you and your preferences as part of a select group. As consumer data analytics capabilities continue to advance, it will be essential for retailers to strike a balance in their use of this information so that customers will view the use of this data as a helpful tool and not as an intrusion.
Casey Milianta is a real estate attorney who focuses her practice on a variety of commercial real estate transactions including acquisitions, dispositions, leasing and financing.
She represents purchasers and sellers in the acquisition and disposition of real estate assets, and she represents lenders and borrowers in commercial real estate mortgage and mezzanine financing transactions.
Casey also works with landlords and tenants in connection with leasing office and retail space in Class A properties.