How retailers struggle between data privacy and personalization

30-second summary:

  • Retailers need to personalize experiences to stand out, but customers are wary of sharing data.
  • This is the central challenge addressed in a new white paper from research firm WBR Insights and payments solutions provider Valitor.
  • The resulting survey indicates retailers are making some progress, but generally they have not exerted the necessary effort to convey the consumer benefits of sharing data.

Retailers face a dilemma. Personalized relationships to customers are key to success, but data privacy scandals and regulations make it more difficult to acquire that info.

To figure out the strategies used to overcome this challenge, research firm WBR Insights worked with payments solutions provider Valitor late last year to survey more than 300 retail execs in the EU.

The resulting white paper, “Breaking the Cycle of Impersonalization: Nobody Cares” (free, registration required), found a mixed bag where brands are trying to navigate a middle ground.

“Data privacy scandals and breaches have sown distrust in consumers,” WBR Insights Research Analyst Lily Johnson told ClickZ via email, “and overall they have become much more savvy regarding how their data is being used (particularly following the launch of GDPR).”

“They want a personalized experience,” she added, “but also they want their data to be respected. This is the data privacy/personalization dichotomy.”

Johnson said that, in response, retailers need to rebuild consumer trust by showing the resulting tangible benefits.

Sharing data

Slightly more than half (51 percent) of the respondents said they target communications based on customer data, while slightly less than a third (31 percent) have such data but don’t use it.

Thirty percent of respondents said consumers would make their data available if they received a tangible benefit, such as free WiFi in the stores or discounts.

Only 24 percent of consumers would share that data without such benefits, even if it meant a more personalized experience.

Part of the reason for this low level of acceptance for sharing data is that many retailers are not adequately conveying the benefits.

Fifty-five percent of retailers said that, from the customers’ point-of-view, the “greatest benefit to passing their data over is a personalized brand experience.”

But over half of the responding retailers said they offer only standard, basic or no solutions for educating users about how the data is used.

personalization and data privacy

From the white paper

“Retailers need to make the customer feel that the data being gathered about them aims to benefit them because the retailer cares about their journey and experience,” Valitor GM Angus Burrell said in an interview in the white paper.

Hybrid stores

Forty-six percent of the surveyed retailers are building a hybrid physical/online store by having their online inventory directly linked to their physical shelf inventory, so that online sales could be driven in-store as well as online.

In other words, those retailers see themselves as having one inventory, residing in two places but accessible in either.

Another 34 percent are in the process of making this happen in the future.

This demonstrates that the surveyed retailers are on their way to employing data to create a wider selection for consumers.

The bottom line, according to the white paper, is that brands need to utilize multiple data sources to create a single customer view that enables personalization in order to differentiate themselves, while convincing customers of the value of providing that data.

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