Top retailer’s consumer data collection plans raise privacy violation concerns

Finland’s leading retail cooperative S Group intends to start collecting itemised information about its loyal customers’ purchases in the near future. The country’s main consumer advocacy group suspects the new policy would be a privacy violation.

S-Ketjun etukortti.
Image: Yle

Finland’s top-grossing firm in the retail and services sector, the S Group, is planning to start collecting detailed information regarding the purchases of its loyalty card holders as of September 2016. The head lawyer at Finland's leading consumer advocacy organisation The Finnish Competition and Consumer Authority (FCCA) finds the news astonishing.

The S Group owns the Alepa, S-Market and Prisma chains of stores, in addition to many hotels, restaurants and hardware stores in Finland. The proposed tracking system would apply to the shop purchases only.

Pekka Malmirae is the director of customer relations at S Group. He says the information they receive with the new data collection system will be used to build better service experiences for their customers, although the details haven’t been worked out quite yet.

“First we’ll gather the data, and then we’ll develop our services accordingly. The concept is still in the design phase, but the idea is to get the first new services up and running quickly in the autumn to meet the needs of our customers,” he said.

Better targeted advertising

In practice, these kinds of services could use the buyer records to target advertising or send helpful recipes. The S Group is confident its loyal customers will respond positively to the change. 

The FCCA’s top lawyer, Tuula Sario, does not share their view.

“I was quite dismayed when I heard the news. Should stores really be able to monitor the menstrual cycles, beer drinking habits and contraceptive use of its customers? I find it all very perplexing and I doubt that the customers will be pleased,” she said. 

Sario said data collection has gone too far peering into people’s private lives. But she said the real problem will be data storage, and the possibility of outsiders gaining access to the purchase history information. It is no secret that every data system is vulnerable to hackers, she pointed out.

Discounts or privacy, take your pick

S Group customers can block targeted ads, but if they want to opt out of having their purchase data recorded, they will have to relinquish their S loyalty cards come September. Sario advises everyone who is concerned about their personal privacy to consider the latter.

“The customer is in effect selling some of their private data to the company. You should always be wary of volunteering personal data. Is the benefit received really worth it?” she asked.

S Group’s Malmirae says only a very limited amount of employees would have access to the data, and all of the necessary precautions have been made to secure the information.

“In theory, anything is possible, but we have done our best to prevent a security breach. As one of the largest retailers on the market, we have a very large customer registrar to administer and we take that responsibility seriously,” he said.

Customers expect it?

S Group has collected customer data before, but until now, it has been limited to product group information. Malmirae illustrates the difference by explaining how previously the system would record a ’milk and cream’ section purchase, whereas from September onwards, the new system will take note that the customer bought a certain brand of lactose-free milk. 

He says changes in recent years have made people more conducive to the idea of data collection.

“Digital services have become so commonplace; people already reveal so much information about themselves with every transaction they make. In a way, it has gradually led to a mode of operation whereby customers are irritated if a merchant doesn’t know what they want.”

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