Emerging Technologies and Data Protection Compliance Considerations from the National Retail Federation "Big Show"

Key Technology Trends in Retail

This year’s expo highlighted several transformative trends and innovations, including:

1. Big Data and Customer Profiling: Vendors showcased sophisticated customer analytics platforms that integrate data from online and in-store interactions, social media, and third-party data brokers, enabling retailers to create highly detailed, real-time customer profiles. For example, exhibitors highlighted platforms capable of incorporating demographic and behavioral data sourced from brokers to supplement in-house data, offering more granular segmentation and targeted marketing capabilities. Developments in predictive analytics and sentiment analysis promise to further anticipate customer needs and personalize the shopping experience.
2. Fraud Detection and Surveillance: Vendors demonstrated AI-powered systems and advanced surveillance technologies that analyze customer interactions in real time, identifying anomalies that may indicate fraudulent activity. For example, AI-enabled cameras can analyze customer behavior and biometric data to monitor customers and detect shoplifting or other suspicious activities.
3. Body Scanners and AI Mirrors. Vendors presented body scanners and AI-powered mirrors designed to provide consumers with more efficient and personalized shopping experiences, for example, by enabling virtual try-ons in space-constrained retail locations or offering tailored product recommendations based on detailed anatomical assessments.
4. Location-Based Services and Tracking. Vendors continue to refine tracking technologies to more precisely track customer location and movements within stores to better understand the appeal and effectiveness of personalized services, such as targeted promotions, displays, products, checkout processes and so forth.

Privacy Compliance Considerations

While these innovations have the potential to provide significant benefits to retailers, they also raise key legal and compliance challenges. To stay ahead of the curve, retailers should consider:

1. Comprehensive Privacy Assessments for New Technologies: Many of the general state privacy laws require companies to conduct data protection impact assessments when engaging in high-risk personal information processing activities, and the use of certain technologies may automatically trigger an assessment requirement. Retailers should think about conducting an assessment when employing vendors or tools to engage in activities such as profiling, automated decisionmaking, or targeted advertising or when processing sensitive data, such as biometrics or precise geolocation. Notably, the Maryland Online Data Privacy Act requires companies to conduct an assessment for each algorithm that is used.
2. Biometric Data Compliance: Requirements under biometric privacy laws reach beyond facial recognition and fingerprinting to technologies that analyze physiological and physical characteristics such as gait or keystroke dynamics for identification purposes. Retailers employing novel surveillance or heat mapping technologies should consider whether they are collecting biometric data in a way that triggers additional compliance requirements, such as providing notice or obtaining consumer consent.
3. AI and Algorithmic Accountability: As AI tools become more central to retail strategies, businesses must address potential biases in algorithms, provide transparency, and mitigate risks associated with automated decisionmaking. Regulatory scrutiny of AI systems is increasing globally, with U.S. state laws requiring accountability measures for AI and opt-outs to automated decisionmaking and profiling.
4. On-Premises and Device-Based Data Storage: Some vendors offer on-premises or device-based data and AI storage solutions to address concerns around cloud security and the potential misuse of proprietary data by vendors for training external models. These approaches can help mitigate risks associated with cloud dependency and unauthorized data sharing, while offering greater control over sensitive information.
5. Consumer Protection and Advertising: Various laws require that personalization tools that leverage sensitive customer data, such as browsing history or location, are implemented in a transparent manner to avoid misleading consumers. Retailers should consider reviewing how they use customer data for targeted ads and promotions, and providing clear opt-out mechanisms. Additionally, businesses should be aware of regulations governing deceptive marketing practices and consumer consent, ensuring their practices align with both privacy and advertising standards.

As the retail landscape continues to evolve, staying ahead of emerging data protection risks requires ongoing vigilance and proactive strategies for compliance to help ensure that innovation doesn’t outpace the ability to protect consumer privacy.

Authored by Roshni Patel.