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Privacy v. Personalization: How Retailers Like IKEA Walk the Line

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Technology continues to advance at lightning speed, generating reams of data about when, where and what consumers like to shop. After studying the value that engaged customers can bring to their bottom line, smart retailers are eager to provide a personalized shopping experience. 

But as they leverage technology to create an optimal customer encounter, some retailers are finding that customers crave the personalized attention but dislike the intrusion. Some markets, including the European Union and the state of California, are even legislating how merchants can use consumer data. Consequently, retailers must navigate the boundary between protecting consumers’ privacy and creating a profitable experience.

A personalized shopping experience pulls data from consumers’ past purchases, web searches, and demographics to create a meaningful customer relationship. This level of attention generates sales when retailers can suggest specific products, send targeted promotions, and tailor product searches.

Despite the benefits that targeted data can bring, its misuse can prove detrimental to the retail industry. Retailers who can’t or don’t protect private customer information may erode consumer trust and find themselves at a disadvantage.  

IKEA exemplifies a retailer who delivers on dual fronts. Here’s how the Swedish home furnishing behemoth walks the line.

 

Personalization at IKEA

For IKEA, online home planning tools that let shoppers re-imagine their homes is key to generating sales and creating repeat customers. But while the retailer has long offered in-catalog and in-store apps, its customers wound up with plenty of tools that couldn’t integrate into a cohesive personalized shopping experience or allow for seamless in-store or online purchases.

Enter IKEA’s Place app. Customers can easily browse IKEA’s massive product selection and use augmented reality to see how these items will fit into their homes. The 3D format can move and rotate the latest IKEA furniture and home accessories. The app also suggests products and targets promotions based on the customer’s search behavior. This helps create a seamless personalized shopping experience, whether the customer is online or in an IKEA store.

The Swedish furniture giant’s approach lets customers tap into their creative side to envision how IKEA can fit into their lives. The retailer succeeds in creating a personalized shopping experience by demonstrating the high value that customers place on fashioning their own journey into interior design and giving them effective tools to this.

 

Privacy at IKEA

As it rolls out cutting-edge personalization techniques, the global housewares retailer is advancing privacy controls by allowing shoppers to decide how their own data works. An in-app feature, available to consumers in certain markets in April, will allow customers to dictate how long IKEA can keep its data and whether the company can use their search and purchase history to recommend products.

Departing from traditional retail tactics, IKEA’s innovative approach to addressing customer privacy appeals to emotion. The retailer recognizes that most customers feel uncomfortable with long, complicated privacy disclosures and confronts this concern directly. Using simple graphics and terms, IKEA walks customers through their own “personalized” privacy process that allows them to dictate how their information can be used. This exercise shows customers how loosening their privacy preferences can provide them with a better level of service. IKEA’s approach meets the customer’s desire to remain in control of their own data.   

 

Takeaways from Other Retailers

From Amazon to Walmart, some of today’s largest and most successful retailers have found ways to embrace personalization while remaining sensitive to customers’ concerns.

Amazon has debuted privacy controls that let users opt-out of targeted ads based upon their interests and buying history. Consumers can control their preferences and protect their privacy by clicking a link found at the bottom of the website or visiting Amazon’s Privacy Notice page.

They can also visit Amazon’s Recommendations tab to edit which previous purchases the web retailer uses to generate product recommendations.

Starbucks takes the personalized shopping experience to the next level through its Starbucks Reward loyalty app. The app allows the coffee giant to tailor offers in real-time based on users’ buying habits and preferences. It can also recommend additional items to pair with a customer’s order, highlight the nearest location, and process orders for pickup.

This high degree of consumer engagement appeals to customers, especially daily coffee drinkers, and creates excitement around visiting a Starbucks store. Since the customers are getting a reward that is meaningful to them, they are more willing to share their information. 

Target’s recent rollout of its new Target Circle app has allowed the retailer to leverage consumers’ purchase history, buying preferences, and personal data to forge a more meaningful connection. Special birthday offers, exclusive access to store sales, and personalized offers deepen the relationship with the customer beyond the cash register. In certain test markets, Target is piloting an in-app feature that allows users to earn and cast votes to decide which local non-profits should receive a grant from the retailer.

In Target’s 5,000-word privacy policy, customers can click a link to opt-out of having their data shared for marketing purposes or Interest-based ads. While this may seem to put the retailer at a disadvantage, the ability to opt-out can increase customer satisfaction by giving shoppers control over how their information is used.

Walmart can personalize the content a customer sees through its mobile app by crunching purchase history data. This helps reduce the time shoppers spend searching online, which increases the probability that even a casual browser will complete the purchase.

Like Target, Walmart has followed a more flexible approach to privacy controls and lets customers opt out of seeing personalized ads online. Putting control of personal information back into consumers’ hands allows Walmart to build better trust with its customers. 

 

Conclusion

Creating a personalized shopping experience is crucial in today’s competitive retail climate. But, providing tailor-made experiences can be tough for retailers trying to balance personalization and privacy. Too much personalization can intrude upon consumers’ privacy, but too much privacy hinders marketing efforts. 

Successful retailers are discovering that a personalized shopping experience can produce outsized value. They know that developing a meaningful relationship is not about a one-time purchase; it can create lifelong customers.

Stores may only have one chance to win over a customer. Whether they operate a small cluster of locations or thousands, retailers can get the customer experience right every time with CB4. Find out what we can do for you.   

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