Online sales are predicted to rise dramatically over the next decade, accounting for 53% of the total retail market, but this could be scuppered by consumers’ increasing unease with sharing their data with companies.
Research report ‘The Digital Tipping Point’ from law firm Womble Bond Dickinson and Retail Economics highlights how e-commerce is expected to grow from a current 19% to 53% partly fuelled by generation Z and millennials accounting for a sizeable chunk of the adult population with the attendant incomes.
But the worry is that this growth could be derailed by the growing wariness this younger demographic has with sharing its data with large organisations. They have serious concerns about how it is used and worries about the lax protection of their privacy – as highlighted by a growing number of data breaches and the introduction of the GDPR regulations.
The report found that only 8% of respondents believe they benefit more than the businesses do from the data that they share with them. And 26% think there is an equal exchange of value. The majority clearly believe the perceived benefit of value lies with the businesses.
Against this backdrop there have been moves by a growing number of consumers to limit the amount of data they share with companies. This is highest among the 16-24 year old age group, with as many as 32% having taken some action. Even among the older groups there have been some efforts to limit access to their data, with 30% of 55-64 year olds restricting their levels of sharing.
Such limitations will make it tougher for retailers to personalise their offers to individual customers. But the report found that respondents did not actually value personalised services from retailers. As many as 38% of consumers stated they would be unlikely to share their personal information in order to receive tailored services. This contrasts with the 52% who would share data in order to receive financial rewards and the 48% who would do so for free products and services.
Gavin Matthews, head of retail at Womble Bond Dickinson, says: “Online retail is being driven on apace due to a combination of factors and early adopters in the retail market who can flex and adapt their business models quickly will rise to the top. However, as retailers leverage new technologies to support this growth, new risks also emerge. Consumers are increasingly conscious of the need to protect personal data and their privacy in order to reduce the risk of fraud, identity theft and misuse of their data. Real damage can be done to a retailer’s brand and reputation with any data breach and loss of trust can have far reaching consequences for any business and its bottom line.”
This is very worrying for the retail industry that is currently working hard to move away from attracting/incentivising shoppers through margin-eroding monetary rewards and instead focusing on providing a much more personalised service.
Much of the investment in technology such as AI is based on creating a more tailored proposition for shoppers and the success of such initiatives is absolutely predicated on access to customers’ data.
Glynn Davis, editor, Retail Insider