Mobile shopping apps are more popular than ever. Consumers regularly download and enroll in their favorite grocer, coffee shop, quick service restaurant (QSR), and other retailers’ mobile apps. For example, the Whole Foods and Starbucks apps allow loyalty members to scan a QR code at the point-of-sale to take advantage of personalized offers and pay conveniently with a contactless mobile wallet. According to a 2022 NewStore survey, 9 in 10 consumers have at least one shopping app installed on their mobile device and half use mobile shopping apps at least a few times a week. However, many consumers may not realize what personal information they are sharing with the businesses. The same survey also found that 45% of consumers would not download a business’ app if they have security or privacy concerns.
Consumers are not fully aware of the potential privacy risks associated with using a shopping app. During enrollment, most shoppers often consent to sharing personal data without reading the lengthy miniscule-sized font user agreements. Their priority is to promptly take advantage of loyalty rewards and savings. With 90% of consumers using a shopping app, and nearly half of consumers reluctant to download an app due to privacy concerns, there appears to be lack of understanding on the consumer side and lack of transparency on the business side.
In general, businesses track customer purchase data and analyze how customers engage with their apps. Common data points include browsing behavior, mobile battery and signal strength, and length of time spent on the business website. Some businesses also collect info from patrons that interact with their social media accounts, including customers’ profile pictures, usernames, email addresses, friend lists, age, gender, and interests and likes. Businesses can use the data to better understand customer shopping habits and demographic segments, e.g., education, ethnicity, income, languages spoken, location, marital status, and number of children or pets in a household.
Some businesses go as far as collecting sensory data such as CCTV recordings of consumers in public places, and voice recordings of customer service calls. Certain locations even permit biometric facial recognition data collection. While this data helps businesses understand their customer base, some are also profiting off it. Merchants such as Kroger, Safeway and Walmart have their own retail media networks, which are advertising platforms that allows the businesses to sell customer information to data brokers and advertisers.
Customers can opt out of tracking, but the process can be confusing and cumbersome. Each business has a different privacy policy and different levels of consumer control to opt out of tracking and selling data. Some retailers will not allow customers to earn loyalty rewards unless data is shared. Comprehensive consumer data privacy legislation exists in certain states. California, Connecticut, Colorado, Utah, and Virginia allow customers complete control over their data.
Consumers should carefully review what data they are consenting to share with businesses the next time they download a shopping app. Retailers should also be more transparent about the data they are collecting from their customers and how it is being used to ensure customer trust and loyalty.
