COVID-19 has presented many new challenges for retailers. The widespread lockdowns around the world forced many retailers to close their doors, and as a result, consumers have increasingly moved online. In April, online sales increased by a daily average of 49 percent, according to a report from Adobe. But while online sales were up, overall U.S. retail sales plummeted by a record 16.4% in April, likely due to widespread economic issues and unemployment.
Now, countries around the world have begun the process of reopening and retailers have been allowed to reopen ‘physical’ stores, but that doesn’t mean retail will look the same as it did before or that sales will go back to normal levels immediately. In fact, with continued unemployment and financial issues for many, the truth is that it may get worse before it gets better — in a recent McKinsey survey, 67% of consumers reported they expect to spend less on apparel in the near future than they typically would, suggesting consumers may be extra cautious with their spending in the coming months. And with research showing that a data breach negatively impacts customer loyalty, it’ll be important for retailers to take steps now to mitigate further revenue losses and prepare for the new normal by ensuring security and compliance with data privacy regulations.
The changing retail experience
Even before the pandemic, the retail environment was shifting. The eCommerce revolution brought increased competition for retailers, offering improved customer experiences, convenience and variety. Retailers have had to step up their online presence, but that’s not all. — eCommerce has forced them to improve the in-store experience as well. Due to the convenience of online shopping and the move toward more digital experiences, consumers have come to expect more personalized experiences across all engagement channels. As a result, brick and mortar stores implemented more in-store digital solutions and omnichannel experiences, such as curbside pickup and customized contact-less delivery, which have both come in handy during the pandemic.
The digital revolution is changing customer service, too, with new ways for retailers to communicate. Customer service channels used to be limited to the phone or email, but now include mobile apps, website chatbots, texting and social media. This has allowed retailers to keep up with changing consumer preferences, while simultaneously adding another layer of flexibility and convenience for customers.
While these new digital experiences have introduced many benefits, they have also made retailers increasingly reliant on data, and that comes with a lot of risk and responsibility.
The increased importance of security and compliance
Over the last several years, an increasing number of high-profile data breaches, such as Macy’s and Target, have brought consumer data security and privacy into sharp focus. Couple this with the increase in online shopping and the proliferation of customer engagement channels, there are more avenues for bad actors to steal data. For example, Verizon’s recent Data Breach Investigations Report found that while payment card skimming and PoS attacks have decreased in recent years, web application attacks continue to be on the rise. Now, as a result of remote working and increased digital adoption among consumers, COVID-19 has opened up even more vulnerabilities for hackers to exploit.
In order to protect consumers and hold businesses more accountable, governments around the world have begun passing new data privacy laws in recent years, such as the GDPR in Europe and the California Consumer Privacy Act in the United States. Due to these regulations, companies can now be fined for breaches of consumer data. Last year, British Airways was fined over $200 million under the GDPR, underscoring the growing importance of having a robust data security strategy.
But these aren’t the only consequences retail businesses may face as a result of a data breach. A recent PCI Pal survey showed potential revenue losses for companies that suffer a COVID-19-related breach, with 64% of U.S. consumers reporting they would avoid buying from the company for up to several years, and 17% reporting they would never return. Data breaches, particularly during a sensitive time like COVID-19, can erode customer trust and loyalty, so it’s in any organization’s best interest to be compliant and secure customer data.
By complying with PCI DSS, retailers can ensure any sensitive payment data is secure and protected from opportunistic hackers. Compliance with PCI DSS can also ensure adherence with any data privacy regulations, reducing the risk of potentially damaging fines and other consequences. PCI Pal is here to help. Our secure payment solutions descope your organization from the requirements of PCI Compliance and safeguard payment data across any customer service channel. Contact us today to learn more.