Why consumer trust is plunging—and what retailers can do about it
Consumer trust has taken a plunge, and haziness around how corporations are using AI is adding fuel to the fire, according to Deloitte’s latest privacy report.1
The report, Deloitte's Privacy Index 2024: A Transparent Tomorrow, examines the dynamics of consumer privacy and trust in the era of intelligent automation—analysing AI and ADM management practices across 10 industries and capturing Australian consumers' perspectives on the matter.
As part of this research, 1,000 Australians were asked which industry they trust most to handle their personal data. The leading response: "None of the above" (30%). The government came in second place, with 28% of respondents citing it as the sector they trust most with their information. Retail landed close to the bottom of the board at 2%, just ahead of telecommunications and media (0.5%) and real estate (0.5%).
This low customer trust is taking a toll on businesses. Half of consumers (up from 35% last year) are now opting not to purchase a product or service when asked for excessive personal information. Additionally, 59% of respondents report that they have already, or plan to, restrict the personal information they share with brands.
So, what’s driving this nosedive in consumer trust? Deloitte’s research points to the tech boom. Recent advances in generative AI have brought AI and ADM into the scrutinising gaze of the public eye, stirring conversations and questions around responsible use, data handling, and privacy.
Customer Loyalty Specialist at Qualtrics, Isabelle Zdatny, weighed in on this topic in an October interview with Mi3, saying: “Consumers in Australia are some of the biggest sceptics anywhere in the world when it comes to AI.” 2
The finding that organisations are failing to communicate their AI practices only feeds the already-burning fuse of consumer distrust. Deloitte’s research indicates that while 72% of Australia’s leading brands mention using AI, ADM, or other innovative technologies, only 4% include an explanation of how these technologies are used to make decisions that affect consumers.
The lack of transparency in how intelligent technologies are communicated remains a persistent concern. Just two months before the release of Deloitte’s privacy report, the National AI Centre published the 2024 Responsible AI Index. It revealed that Australian businesses routinely overestimate their ability to implement responsible AI practices, finding that while 78% of Australian organisations believed they were deploying AI safely and responsibly, only 29% of cases met the standard.3
Transparency and responsible data practices are essential for regaining consumer trust. As Deloitte Technology & Transformation Partners Lucy Mannering and Daniella Kafouris explain, a growing sense of lost control over personal information, frequent data breaches, and the mismanagement of personal data have prompted much-needed reforms to Australian privacy laws.
“Savvy organisations can seize this opportunity to get ahead of the legislation by ensuring their privacy practices are fair, ethical, secure, and protect both their business and their consumers,” they said.
Proactively adopting responsible AI and ADM practices is about nurturing customers and bringing them along on the journey. Raising awareness of AI’s role in everyday processes also empowers consumers to make informed decisions about how their personal information is used.
While trust in AI remains low, there’s room for optimism. According to Deloitte’s findings, 89% of consumers believe it’s not too late for organisations to regain their trust—and this can start with demystifying AI and educating consumers on its use.
As Lachlan Jefferies, Retail Lead at Truis, points out, AI is often misunderstood:
“There’s a lot of negative stigma around AI and machine learning. A lot of people immediately imagine this dystopian world and everything that comes along with that,” he said.
“But AI is a tool that can be used in so many different ways—just like the internet. Almost everyone is already using or benefiting from AI to some degree,” he added.
Just as the internet has become an essential and trusted tool, AI has the potential to do the same—if businesses foster transparency and accountability in its use.
To move the needle, Australian retailers must focus on transparency and consumer education. By openly sharing how AI and ADM systems are used in customer interactions, retailers can begin to dismantle the stigma surrounding these technologies.
As Deloitte Technology & Transformation Partners conclude, “Investing in robust privacy practices isn’t just a compliance requirement but a strategic necessity to rebuild and maintain consumer trust.”
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Sources
3 fifthquadrant.com.au/responsible-ai-index-2024
