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Consumers Want Omnichannel, But Have Privacy Concerns

How well are retailers delivering omnichannel experiences? How do consumers feel about their current online and in-store shopping experiences?  A new study, recently published by Periscope by McKinsey, set out to answer these questions. The study, based on a survey of about 1600 respondents in the U.S. and the U.K., during July 2016, showed that consumers want better purchasing experiences across online and in-store shopping, but at the same time are wary about the personal data they might need to give up to have these experiences.

Here are some key findings from the study:

  • In-store shopping is, unsurprisingly, still the preferred method of purchasing (83% U.S., 77% U.K.), followed by online ordering via desktop for home delivery (59% U.S., 55% U.K.)
  • The preference for in-store shopping is just as high for millenials as for older age groups (80% for the former), indicating that the desire for physical retail experiences remains strong across generations regardless of how “digitally native” they are.
  • Inconsistency in pricing across online and in-store is a frustration (54% U.S., 55% U.K.)
  • Another frustration consumers have is with personalization, such as online recommendations, that miss the mark (24% U.S., 26% U.K.); they do value recommendations, as long as they are relevant.

Omnichannel retail’s challenge: personalization that doesn’t get too personal

One of the most notable findings is that consumers want retailers to provide relevant personalized information, and yet are wary about giving those retailers the personal data retailers want in order to provide that information. Many respondents noted that they would like retailers to have better knowledge of their preferences, both online (27% U.S., 29% U.K.) and in-store (22% U.S., 18% U.K.). Yet at the same time, an overwhelmingly large proportion of respondents expressly do not want their personal data used to optimize their shopping experience by connecting in-store and online information (61% U.S., 62% U.K.).

Is this a case of consumers wanting to have their cake and eat it too? To a degree, yes. In order to receive relevant recommendations and personalized offers, consumers will inevitably need to provide retailers with personal data. Unless a retailer knows you have entered their store, for example, they can’t very well provide you with specific deals in that store.

Yet I believe the underlying issue here is more about consumers wanting stronger guarantees that their data will be safe and secure, and will be used for explicit purposes in ways that they can control. There have been too many recent events in the news about security breaches of retailers’ customer data (for example in 2014, where the details of some 70 million Target customers were hacked), not to mention of personal data stored at government agencies (such as at the National Health Service in the U.K.).  Consumers need the assurance that just like when they trust a bank with their cash, knowing the bank won’t use that money for its own purposes, so should retailers not use their data for purposes in ways they are unaware of or to which they don’t agree.

An FDIC for omnichannel retail?

Taking the bank analogy a bit further, one way for retailers to earn consumer trust about their data is to develop an FDIC-like guarantee for their data. For non-U.S. readers: the FDIC is a U.S. government corporation that guarantees the safety of a deposit in an individual bank up to $250,000. Created in response to the bank failures of the 1920s, the FDIC helped U.S. banks to regain the trust of consumers: since its founding in 1934, no depositor in an FDIC member bank has lost a cent to bank failure.

Similarly, retailers need to make some meaningful gesture to gain consumer trust around the use of personal data. In effect, data is a consumer currency: in the wrong hands, it can end up costing a person dearly if their identity is stolen, not just in monetary terms but also in time in getting the mess sorted out and repairing any damage to their credit rating. Perhaps retailers need to come up with some sort of “data insurance” program that recognizes the value of consumer data to consumers, and the risk that consumers take entrusting them with their data.

Technologists, data scientists, marketers, and retailers have all made tremendous advances in recent years towards connecting online and offline worlds in order to provide omnichannel purchases. And this study provides evidence that consumers want this. However, none of these advances will realize their potential if consumer privacy and trust are not addressed in a more transparent fashion.


For more coverage and analysis of the role of privacy and personal data relating to customer experience management, check out our recent webinar on the importance of getting ready for the European Union’s General Data Protection Regulation (GDPR).


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