The stakes are high because retailers are finding that customers who buy in more than one channel spend four times as much as customers who shop in a single channel. Internationally, European Union privacy directives have already had a major impact on how data about European customers can be handled. The EU gives customers the right to opt out of a retailer's customer data, to view what information is in the database and to correct any inaccuracies found. This level of sophistication, Hotka suggested, is well beyond the current capability of most U.S. retailers. Most retail CIOs for example, would not know how to remove a customer from their database, she said.
Legislators sometimes have little grasp of the impact of laws they are considering.
Hotka spends much of her time discussing the impact of proposed bills with legislators to prevent this type of unintended consequence. The uncertainty has led to a suspension of activity in the area of customer database consolidation in the retail industry, she said. Instead, many high-end retailers are focusing on customer relationship management projects. Privacy issues are related to security issues, but the differences are many. In general, retailers are not putting a high priority on e-security.