While the outcome of the investigation is still uncertain – Bunnings and Kmart maintain that they acted lawfully – the consumer backlash has already begun on social media.
But this is far from the first time that retailers have been called out for their questionable use of consumer data, so why does it keep happening?
We spoke with consumer behaviour experts Jason Pallant, a senior lecturer in the marketing department at Swinburne University, and Petah Marian, founder of Future Narrative, about the facial recognition fiasco, and why it’s more complicated than it might seem.
What is facial recognition technology used for?
In Australia, facial recognition technology is primarily used as a means of preventing theft and antisocial behaviour, but in other markets, such as China, there are examples of people using facial recognition as a payment tool.
“The first experiment was using it with KFC and Alibaba, where people could smile to pay back in 2017,” Marian told Inside Retail.
Another potential use case is around personalising customer service in stores.
“Retailers can do a lot to identify people online – IP addresses, logins, cookies – but it’s a lot harder to do that in a physical space,” Pallant told Inside Retail. “There’s potential for facial recognition to help personalise the experience in a physical space.”
How widespread is facial recognition in retail?
While it’s hard to say how widespread facial recognition technology is in retail stores, Pallant believes it’s still relatively rare.
“My sense is that being able to identify an individual customer and compare it to an existing database of people is not that common,” he said.
“It’s one thing where you walk into a store and cameras follow you. Every retailer has some version of that, but they’re not necessarily storing images and saying, ‘That’s Jason. We have him on a list of people that shouldn’t be in the store.’”
What are the arguments against using facial recognition?
According to Pallant’s research, facial recognition is one of consumers’ most hated forms of personalisation.
“We don’t feel comfortable with brands and retailers having our face. It feels very different from them knowing that we’re logging into a website for the fifth time,” he said.
The main reason is that consumers generally don’t experience any benefits from facial recognition technology in retail settings, unlike when they use it to unlock their smartphone, for instance.
“The problem with the argument around theft reduction is that [retailers] are essentially saying, ‘We need this as a brand’, but they’re not saying how consumers will benefit from having their face captured and recognised and stored,” Pallant said.
Another problem is that consumers can’t opt out of the technology if they don’t like it.
“I don’t have to use facial recognition on my phone, I can check out as a guest on most retail sites, there is a choice that consumers can make,” Pallant said.
“[With facial recognition], your only choice is to not enter the store. But if that’s your local store and you need something urgently, that’s not really a choice.”
Is this a new problem?
This is far from the first time that businesses have been called out for their use of consumer data. In 2018, the Cambridge Analytica scandal in 2018 revealed that millions of people’s personal information had been collected from Facebook and shared with organisations without their knowledge.
It sparked a US Senate inquiry, caused organisations, such as Patagonia, to stop advertising on Facebook, led some people to close their accounts and kicked off a wider conversation around consumer data and privacy that is ongoing today.
“People were angry, but ultimately not that many people actually closed their Facebook accounts at the time. But we are seeing that privacy conversation take place more aggressively now as people start to understand more about the value of their data, with the campaign that Apple is running around privacy, and the shift away from cookies,” Marian said.
“These things, while perhaps not creating huge boycotts by consumers, are definitely eroding the perception of those businesses – while lots of people still use Meta products, customer perception of it as a force for good has faced significant long-term damage.”
So, why do retailers keep using consumer data in questionable ways?
But if businesses have been burned for using consumer data in questionable – if technically legal – ways before, why do they keep doing it?
“Not just retailers, but all businesses are collecting a lot more data about consumers than most people are aware of, and frankly, probably more than they would be comfortable with if they were aware of it,” Pallant said.
The truth is that consumer data is simply too valuable for many businesses to pass up.
“Some of the best companies at the moment are in their positions because they know their customers the best, and are able to tailor the products and services to them,” he said.
While Pallant believes that it is in retailers’ best interest to be extremely transparent about the ways in which they use consumer data, he acknowledged this could drive some people away.
“By being transparent about it, people might be more likely to opt out, so you’ve lost this data, and that could be a competitive disadvantage if other brands are not doing that and are still using all of those sources of data,” he said.
What’s the main takeaway?
The reality is that the conversation around consumer data isn’t going away, and in fact, it’s only going to become more urgent. So, how should retailers proceed?
“The message is not that collecting and using consumer data is bad,” Pallant said. “The message is that, if retailers are not super upfront about what they’re doing, and if they’re not communicating it in a way that consumers understand and see value in, there will always be a risk.”
Marian agreed that retailers need to spend more time thinking about how their use of consumer data, such as facial recognition, can benefit their customers.
“There are plenty of positive potential applications for facial recognition that lots of companies would be afraid to try because they are concerned about the negative perception of this kind of technology,” she said.
“Delta Airlines has recently launched an interesting technology that uses facial recognition to effectively personalise your journey through the airport, providing individualised way-finding and guidance based on facial recognition, that looks like it would be a great service to the customer.”