Importance of GDPR in the Retail Sector

Published on : 01 Oct 2020

importance of gdpr in retail sector

Technology has drastically transformed the way the retail industry works today. With an enormous amount of customer data processed in the retail industry, it has significantly raised huge concerns about data security. An increasing number of data breaches and theft has pushed regulatory bodies to establish stringent Compliance norms for Data security. General Data Protection (GDPR) is one such regulation enforced across the EU to promote data protection and data privacy across the European Union. However, introducing this regulation has created a stir in the retail industry. Retailers are heavily dependent on customer data for their business. They rely on every single piece of customer information they receive from every interaction with them. Clearly, with so much of dependence and use of customer data for the retail business, it highlights the challenges they would face to prepare and maintain GDPR compliance.

In today’s article, we have briefly discussed how introducing the GDPR Regulation has an impact on the retail industry. We have also highlighted the significance of GDPR in the retail business. But, before we move on to learn about the impact and significance of GDPR, let us first understand GDPR Compliance Regulation in brief.

GDPR Compliance in Brief

The General Data Protection Regulation is a regulatory framework established to promote data security and privacy in the EU. As per the GDPR Compliance Regulation, it requires businesses to protect personal data and privacy of citizens of the European Union (EU). It typically covers all organizations or businesses that deal with the data of EU citizens, specifically banks, insurance companies, and other financial companies. So, as per the GDPR Regulation, an organization is not only expected to gather personal data legally under stringent norms, but they are also obliged to protect the data collected from any exploit or misuse. Moreover, they are expected to respect the rights of the data owner and may have to face huge penalties for not abiding by the regulation.

How does GDPR Impact the Retail Sector?

The role of the customer’s data in the retail industry is significant. More so, when the dependence on the data has considerably risen with growing e-commerce retail businesses globally. GDPR is a regulation that has a great impact on the Retail industry for it is an international data privacy regulation dealing with protecting the rights of data owners and securing customer data. So, in this context, it is absolutely critical for retailers to understand the GDPR.

Huge Penalty

In the constantly-evolving digital landscape, securing customer data is absolutely essential for every retail business. Non Compliance with the standard requirement or misuse of an individuals’ personal data can lead to hefty fines, legal recourse, and reputational and other financial consequences. An incident of a data breach could cost a retailer a huge penalty which could be 4% of their annual revenue or €20 million, whichever is greater.

Explicit permission for using customer data

The GDPR calls for protecting customer’s rights and securing personal data. It is therefore essential for retailers to obtain explicit consent from customers for using their personal information. The conditions for obtaining consent under the GDPR requirements are now a necessity with individuals having the right to withdraw or opt-out of the consent at any time. Moreover, there is a presumption that the consent will not be valid unless separate consents are issued and obtained for different processing activities. This means retailers have to prove that their customers agreed to the processing of their data for certain activities like receive regular sales updates or newsletters. Retailers are not allowed to assume or add any disclaimer or consider that providing an opt-out option is enough for using the customer’s data. Customers will have to explicitly fill out a form or tick a box.

Revised sales and marketing strategy

GDPR has changed a lot of things for retailers, especially the way the sales team works or the way that marketing activities are managed. Companies will now have to review their business processes, applications, and forms to be compliant. They must ensure adopting the best practices using double opt-in rules and consent email marketing. So, for instance, even if the company purchases marketing lists, they are still responsible for getting consent from the customers for using their data. This is applicable even if the data received is from a third-party vendor or outsourced partner. Companies will have to look for new ways to collect customer information for their business.

Strong customer relationship

A positive outlook towards the GDPR Compliance is that it helps build stronger relationships with customers. Now that the retailers have to be cautious about handling the data, the process of collecting data and communicating with customers will be more accurate. Retailers will have to think strategically to gain customer data, abiding by the GDPR compliance. Businesses will have to come up with a better way to earn the trust of their customers and provide better customer experience. So, retailers are bound to improve their customer relationship services and experiences by creating a stronger platform that fosters long-term relationships and customer loyalty.

Significance of GDPR in the Retail Sector

Assures protection of customer data:-

GDPR requires retailers to keep their customer data secure. This will ensure retailers have all the necessary security measures in place to build a strong defense system. The protection of customer data will further prevent misuse of data. It further prevents incidents of a data breach or data theft.

Assures collection of accurate data:-

Since Compliance to the GDPR calls for added data security and consent of customers, it will ensure accurate collection of data. With the implementation of GDPR, retailers cannot afford to collect, store, or use inaccurate data in their business. This will ensure and completely rule out the possibility of inaccuracy in targeting customers for sales and marketing of the business.

Drives sales

As under the GDPR Compliance, retailers are required to collect accurate customer information. This will push them to enhance their targeting strategy and drive better sales. Accurate collection of information will leave no scope of error, ensuring they have their most important data in the best shape.

Building Reputation:-

GDPR Compliance lays the foundation for improved brand image. Consumers are always concerned about their data being misused. But with your business showing compliance to GDPR Regulation will prove that your business is concerned about the customer’s privacy and data security.   This will help build trust and gain the confidence of customers.  Going ahead, retailers who can show that they respect an individual’s personal data are likely to have better access to customer data. GDPR Compliance is a great way to improve transparency and build a strong reputation in the industry.

Consistency in legislation:-

With the implementation of GDPR, it brings consistency of regulation across the EU. This makes it easy for retailers to comply with standard data protection laws across the EU. Although in practice businesses may vary and there may exist local differences, it still helps retailers achieve compliance with a standard regulation rather than complying with different regulations.


GDPR requires you to take a holistic approach to data privacy and data governance. Retailers should establish effective data privacy programs that align with your retail retailer business, operations, legal, and technology functions. The policy and framework established should help drive a culture of data privacy and protection throughout your organization. If your retail business manages to establish and maintain a robust, responsive data privacy framework and corporate policies along with addressing the GDPR requirements, your business will be well equipped against the new-age security threats and data privacy concerns.

Narendra Sahoo
Narendra Sahoo

Narendra Sahoo (PCI QPA, PCI QSA, PCI SSF ASSESSOR, CISSP, CISA, CRISC, 27001 LA) is the Founder and Director of VISTA InfoSec, a global Information Security Consulting firm, based in the US, Singapore & India. Mr. Sahoo holds more than 25 years of experience in the IT Industry, with expertise in Information Risk Consulting, Assessment, & Compliance services. VISTA InfoSec specializes in Information Security audit, consulting and certification services which include GDPR, HIPAA, CCPA, NESA, MAS-TRM, PCI DSS Compliance & Audit, PCI PIN, SOC2 Compliance & Audit, PDPA, PDPB to name a few. The company has for years (since 2004) worked with organizations across the globe to address the Regulatory and Information Security challenges in their industry. VISTA InfoSec has been instrumental in helping top multinational companies achieve compliance and secure their IT infrastructure.