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Even Mince Pies In the Shopping Basket Helps The Supermarket Sell You More

Some digital Christmas reflections for this season…

In the countdown to the ‘season of gifting’ that is Christmas, do consumers care much about how Google and supermarkets are using the data they hold?

Do people just want to get on with shopping, never mind the niceties of privacy, inappropriate personalised advertising and the like?

Google Is ‘Of Interest’ to the EU

It turns out that regulators at Brussels have ordered Google to set out in no uncertain terms just how and why the web giant is collecting user data, on the grounds that EU privacy laws may be flouted.

The EU is demanding that customers are told what data is stored, for how long and be given the right to opt out of what is described as the most ‘invasive practices’.

This concern applies to other internet companies too, but Google is unique in the way it combines data from its wide range of sources. From Google searches, the Google+ social network, Gmail and YouTube, they compile comprehensive profiles of users – better to target advertising.

The EU has suggested that Google information on its website is ‘incomplete’, ‘inconsistent’ and difficult for ‘data experts to comprehend’. Users are not told how long credit card data is stored nor if conversations on smartphones using Android are monitored. They are given no opportunity to be free of the Google treatment.

Google, not surprisingly, argues that their new privacy policy (since March 2012) ‘demonstrates a long standing commitment to protecting users’ information and creating great products’.

And that’s the nub of it. They openly aim to create products to sell. That’s business and certainly many will be relaxed at Christmas, but is it acceptable all the year round?

Supermarkets and Loyalty Schemes

As you traipse round the supermarket to the tunes of Jingle Bells, spare a thought for the huge merchandising machine that is in effect watching your every step, every glance, every actual purchase.

It has long been acknowledged that all loyalty schemes are perfect means of users happily providing free data to shops which is then turned into marketing approaches. The Tesco’s Clubcard scheme is the largest of its type in the world. Nectar is growing.

If you buy mince pies in early December, the thinking goes that you must be interested in more mince pies, cream, brandy butter, ice-cream, plates and cutlery and particular music to listen to while you eat. So, vouchers and discounts come your way as you shop later in the month.

The UK’s Office of Fair Trading is set to enquire into how supermarkets are targeting customers with personalised offers based on previous shopping data. It will ask into whether consumers understand how their information is used and whether they are being treated fairly in law’. They expect to report in the spring, well after the Yuletide season and Valentine’s Day, but ahead of other retailing opportunities like Easter, Mother’s Day, May Day, summer holidays, back-to-school, Halloween, Fireworks Night and yet another Christmas.

Chief Executive of Sainsbury’s admitted that ‘Nectar allows the retailer to understand our customers better and provide them with relevant offers’. So, at a stroke, the loyalty schemes seem to reward customers with points/prizes/discounts and lead to further special offers/discounts/suggestions aimed at each one separately.

The OFT concern is that some shoppers are being charged differently for goods and services through personalised marketing. They doubt that shoppers have any control over it, which they assuredly do not.

Don’t Forget the Banks, How Can Anybody?

Eighteen months ago, CNN Money was one of several news organisations reporting how banks were cashing in on shopping data. Blake Ellis wrote in July 2011, that banks were recording from statements and credit card returns how much their customers spent, where and what they bought and then preparing targeted offers.

Ellis said that banks didn’t just hand over raw data. Retailers described what types of customers they wanted for a specific product, and then the banks would send a deal to chosen, profile-selected customers. When a deal was cashed, the banks took a commission of around 10-15% of the purchase price. Simples.

Known as ‘merchant-funded incentives’, they are fast becoming a major revenue stream to US banks. Ellis said that a few banks were handing back some of the newly generated profits to customers in the form of other discounts to strengthen their own customer loyalty’ Are British banks far behind?

Of course, most people would see all this as of real benefit to consumers. If you a regular spender at a given retailer and suddenly your bank sends you 20% off voucher there, you are only going to be impressed by the retailer and your bank!

It’s all still open to abuse, to discounts not actually being applied, to loss of competition, abuse of security of data and to small print actually negating the headline offers.

However, I may be out on a limb being concerned about loss of privacy. In 2011, nearly 60% of customers who received an offer by this means redeemed at least one and a paltry 2% of customers chose to opt out!

Do you care about it? Or do you just want to take the offers?

You might also look at:

What Price Loyalty in Nudging Your Behaviour? 10 July 2012

Personal Data: Government Plans a Rich Harvest, 9 April 2012

Deck the Malls With Money, 24 December 2011

Just How Valuable Is Your Web Data? 14 December 2011

Shock and Sell, Cry and Buy: the Slogans of Advertising, 13 December 2011

CNN Money, Blake Ellis, The banks’ billion dollar idea, 8 July 2011

Image: Jeremy Keith