Kristina Bäckström
Universitetslektor
Towards privacy-aware personalization practices in retail
Författare
Summary, in Swedish
Extended abstract
New technologies have enabled an unprecedented level of data collection, enabling retailers to provide
personalized experiences as part of their strategy to deliver better customer value and manage
customer relationships. At the same time, increasingly intrusive data collection techniques have raised
significant privacy concerns among consumers and regulators. The result is an increasingly complex and
evolving legal and regulatory environment that significantly constrain how retailers can collect and use
customer data in marketing and other consumer-facing activities. While consumer-focused and
regulatory research attempts to guide retailers, we know little about the actual day-to-day operational
and strategic challenges retailers face in simultaneously complying with privacy regulations and
personalization. This paper focuses on these day-to-day challenges.
While considerable attention has been paid to consumer-centric research on privacy and
personalization, few have explored the operational and strategic challenges posed by the “impossible
situation” created by 70 % of consumers reporting frustration with lacking personalization, while 70% of
consumers are concerned about firms’ use of customer data (Martin & Palmatier, 2020). Much of privacy
research has focused on exploring consumer’s attitudes towards privacy and their benefit-trade-off
calculations related to personalization (Martin & Murphy, 2017; Bandara, Fernando, & Akter, 2020; Beke,
Eggers, Verhoef, et al., 2022). Similarly, much of consumer privacy has been illuminated from a
regulatory and legislative perspective, such as the privacy implications of the General Data Protection
Regulation (GDPR) (Andrew & Baker, 2021; Johnson et al, 2023) or how to gain consumer trust in data
collection technologies (Larsson & Vetter, 2021). With the increasing use of big data and AI algorithms
for knowledge discovery, pattern and trend recognition, and prediction of consumer attitudes and
behaviors, emerging digital technologies may further increase privacy concerns among consumers and
regulators (Quach et al., 2022) making privacy a priority topic and goal for retailers (Martin & Palmatier,
2020).
Personalization has long been considered an absolute in retail and marketing (Kumar, 2018), often with
a managerial firm-performance perspective, and backed by numerous studies demonstrating that retargeting
and personalization of digital marketing yield increased conversion (Gerrikagoitia et al., 2015;
Fisher & Raman, 2018). Only recently have studies begun to consider the impact of privacy on
personalization, and thus first party data strategy (Latvala, 2022; Long, 2022) and zero party data
strategy (Polonioli, 2022) being proposed to address the challenges of collecting data from consumers
amid growing privacy concerns. However, these studies dangerously assume that firms are mature to
implement the suggested strategies and offer no insight into business practices.
While studies have provided retailers with guidance on how to address issues pertaining to privacy or
personalization respectively, surprisingly few have explored the experiences and practices that have
emerged as a response to the privacy-personalization paradox in the retail market. The aim of this paper
is therefore to understand the challenges faced by retailers today because of the conflicting tension
between the need for customer data and customer privacy concerns. The paper reports work-inprogress
findings from an ongoing research project that explores the challenges retailers face and how
they are addressing them. Questions addressed include: What are strategies that companies can
implement to soften the privacy tension? How can retailers operate with privacy-aware personalization
practices?
The paper uses a market shaping approach; which allows us to analyze the influence of a single activity
by a focal actor as well as the changes as a whole on the system-level (Möller et al., 2020). Moreover,
market-shaping encompasses multiple perspectives and thus can identify not only visible structural
changes on the market, but also cognitive and behavioral changes such as for example consumer
perception or behavior changes (Kjellberg & Helgesson, 2006). The market shaping approach helps us
understand how privacy strategies and their influence on various actors shape the retail market, directly
linking firm-level changes to market-level impacts.
The data collection is based on workshops combined with a multiple case study. The workshop allows a
platform to take shape where researchers can explore themes that emerge collaboratively between the
participants. It provides researchers with access to a better understanding of topics that may not
otherwise be obvious to a participant in a one-on-one setting (Ørngreen & Levinsen, 2017). The multiple
case study involves in-depth interviews with managers in retail companies. The interviews identify
common tensions and challenges, as well as components for strategic solutions to the tensions caused
by privacy-related regulations and consumer privacy concerns. The multiple case study identifies
patterns and regularities across the interviewed companies to develop and identify general insights that
can later be tailored to the retail industry.
The paper will contribute to the literature on personalization and privacy and provide retailers with advice
and knowledge to navigate an increasingly complex context of privacy and personalization challenges. It
will provide important and relevant findings that can, on the one hand, empower individual retailers to
navigate the increasingly complex technological and regulatory landscape regarding privacy and, on the
other hand, inform a wide range of actors that are involved in decision-making processes shaping the
regulatory, technological and market environment. The identified market-level processes arising from the
tensions between privacy and personalization and their impact on firm behavior will enable retailers to
participate actively in the policy debate on the personalization-privacy paradox and be better
represented as actors that are affected by market-level changes within regulation and law. As privacy is
increasingly regulated and a topic for political debate, our findings will also provide a knowledge base for
legislators, associations, and consumer organizations to further inform the dialogue on privacy issues in
the retail market.
Selected references
References
Andrew, J., & Baker, M. (2021). The General Data Protection Regulation in the Age of Surveillance Capitalism. Journal of Business Ethics, 168(3), 565–
578.
Bandara, R., Fernando, M., & Akter, S. (2020). Privacy concerns in E-commerce: A taxonomy and a future research agenda. Electronic Markets, 30(3),
629–647.
Beke, F. T., Eggers, F., Verhoef, P. C., & Wieringa, J. E. (2022). Consumers’ privacy calculus: The PRICAL index development and validation.
International Journal of Research in Marketing, 39(1), 20–41.
Fisher, M., & Raman, A. (2018). Using Data and Big Data in Retailing. Production and Operations Management, 27(9), 1665–1669.
Gerrikagoitia, J. K., Castander, I., Rebón, F., & Alzua-Sorzabal, A. (2015). New Trends of Intelligent E-marketing Based on Web Mining for E-shops.
Procedia - Social and Behavioral Sciences, 175, 75–83.
Johnson, G. A., Shriver, S. K., & Goldberg, S. G. (2023). Privacy and Market Concentration: Intended and Unintended Consequences of the GDPR.
Management Science, (March).
Kjellberg, H., & Helgesson, C. F. (2006). Multiple versions of markets: Multiplicity and performativity in market practice. Industrial Marketing
Management, 35(7), 839–855.
Kumar, V. (2018). Transformative Marketing: The Next 20 Years. Journal of Marketing, 82(4), 1–12.
Larsson, S., & Vetter, R. (2021). Tillit i den datadrivna handeln. Handelsrådet.
Latvala, L. (2022). Thriving in the age of privacy regulation: A first-party data strategy. Applied Marketing Analytics, 7(3), 211–2020.
Long, L. (2022). Effective first-party data collection in a privacy-first world. Applied Marketing Analytics, 7(3), 202–210.
Martin, K. D., & Murphy, P. E. (2017). The role of data privacy in marketing. Journal of the Academy of Marketing Science, 45(2), 135–155.
Martin, K. D., & Palmatier, R. W. (2020). Data Privacy in Retail: Navigating Tensions and Directing Future Research. Journal of Retailing, 96(4), 449–
457.
Möller, K., Nenonen, S., & Storbacka, K. (2020). Networks, ecosystems, fields, market systems? Making sense of the business environment. Industrial
Marketing Management, 90, 380–399.
Ørngreen, R., & Levinsen, K. (2017). Workshops as a Research Methodology. Electronic Journal of E-Learning, 15(1), 70–81.
Polonioli, A. (2022). Zero party data between hype and hope. Frontiers in Big Data, 5.
Quach, S., Thaichon, P., Martin, K. D., Weaven, S., & Palmatier, R. W. (2022). Digital technologies: tensions in privacy and data. Journal of the Academy
of Marketing Science, 50(6), 1299–1323.
New technologies have enabled an unprecedented level of data collection, enabling retailers to provide
personalized experiences as part of their strategy to deliver better customer value and manage
customer relationships. At the same time, increasingly intrusive data collection techniques have raised
significant privacy concerns among consumers and regulators. The result is an increasingly complex and
evolving legal and regulatory environment that significantly constrain how retailers can collect and use
customer data in marketing and other consumer-facing activities. While consumer-focused and
regulatory research attempts to guide retailers, we know little about the actual day-to-day operational
and strategic challenges retailers face in simultaneously complying with privacy regulations and
personalization. This paper focuses on these day-to-day challenges.
While considerable attention has been paid to consumer-centric research on privacy and
personalization, few have explored the operational and strategic challenges posed by the “impossible
situation” created by 70 % of consumers reporting frustration with lacking personalization, while 70% of
consumers are concerned about firms’ use of customer data (Martin & Palmatier, 2020). Much of privacy
research has focused on exploring consumer’s attitudes towards privacy and their benefit-trade-off
calculations related to personalization (Martin & Murphy, 2017; Bandara, Fernando, & Akter, 2020; Beke,
Eggers, Verhoef, et al., 2022). Similarly, much of consumer privacy has been illuminated from a
regulatory and legislative perspective, such as the privacy implications of the General Data Protection
Regulation (GDPR) (Andrew & Baker, 2021; Johnson et al, 2023) or how to gain consumer trust in data
collection technologies (Larsson & Vetter, 2021). With the increasing use of big data and AI algorithms
for knowledge discovery, pattern and trend recognition, and prediction of consumer attitudes and
behaviors, emerging digital technologies may further increase privacy concerns among consumers and
regulators (Quach et al., 2022) making privacy a priority topic and goal for retailers (Martin & Palmatier,
2020).
Personalization has long been considered an absolute in retail and marketing (Kumar, 2018), often with
a managerial firm-performance perspective, and backed by numerous studies demonstrating that retargeting
and personalization of digital marketing yield increased conversion (Gerrikagoitia et al., 2015;
Fisher & Raman, 2018). Only recently have studies begun to consider the impact of privacy on
personalization, and thus first party data strategy (Latvala, 2022; Long, 2022) and zero party data
strategy (Polonioli, 2022) being proposed to address the challenges of collecting data from consumers
amid growing privacy concerns. However, these studies dangerously assume that firms are mature to
implement the suggested strategies and offer no insight into business practices.
While studies have provided retailers with guidance on how to address issues pertaining to privacy or
personalization respectively, surprisingly few have explored the experiences and practices that have
emerged as a response to the privacy-personalization paradox in the retail market. The aim of this paper
is therefore to understand the challenges faced by retailers today because of the conflicting tension
between the need for customer data and customer privacy concerns. The paper reports work-inprogress
findings from an ongoing research project that explores the challenges retailers face and how
they are addressing them. Questions addressed include: What are strategies that companies can
implement to soften the privacy tension? How can retailers operate with privacy-aware personalization
practices?
The paper uses a market shaping approach; which allows us to analyze the influence of a single activity
by a focal actor as well as the changes as a whole on the system-level (Möller et al., 2020). Moreover,
market-shaping encompasses multiple perspectives and thus can identify not only visible structural
changes on the market, but also cognitive and behavioral changes such as for example consumer
perception or behavior changes (Kjellberg & Helgesson, 2006). The market shaping approach helps us
understand how privacy strategies and their influence on various actors shape the retail market, directly
linking firm-level changes to market-level impacts.
The data collection is based on workshops combined with a multiple case study. The workshop allows a
platform to take shape where researchers can explore themes that emerge collaboratively between the
participants. It provides researchers with access to a better understanding of topics that may not
otherwise be obvious to a participant in a one-on-one setting (Ørngreen & Levinsen, 2017). The multiple
case study involves in-depth interviews with managers in retail companies. The interviews identify
common tensions and challenges, as well as components for strategic solutions to the tensions caused
by privacy-related regulations and consumer privacy concerns. The multiple case study identifies
patterns and regularities across the interviewed companies to develop and identify general insights that
can later be tailored to the retail industry.
The paper will contribute to the literature on personalization and privacy and provide retailers with advice
and knowledge to navigate an increasingly complex context of privacy and personalization challenges. It
will provide important and relevant findings that can, on the one hand, empower individual retailers to
navigate the increasingly complex technological and regulatory landscape regarding privacy and, on the
other hand, inform a wide range of actors that are involved in decision-making processes shaping the
regulatory, technological and market environment. The identified market-level processes arising from the
tensions between privacy and personalization and their impact on firm behavior will enable retailers to
participate actively in the policy debate on the personalization-privacy paradox and be better
represented as actors that are affected by market-level changes within regulation and law. As privacy is
increasingly regulated and a topic for political debate, our findings will also provide a knowledge base for
legislators, associations, and consumer organizations to further inform the dialogue on privacy issues in
the retail market.
Selected references
References
Andrew, J., & Baker, M. (2021). The General Data Protection Regulation in the Age of Surveillance Capitalism. Journal of Business Ethics, 168(3), 565–
578.
Bandara, R., Fernando, M., & Akter, S. (2020). Privacy concerns in E-commerce: A taxonomy and a future research agenda. Electronic Markets, 30(3),
629–647.
Beke, F. T., Eggers, F., Verhoef, P. C., & Wieringa, J. E. (2022). Consumers’ privacy calculus: The PRICAL index development and validation.
International Journal of Research in Marketing, 39(1), 20–41.
Fisher, M., & Raman, A. (2018). Using Data and Big Data in Retailing. Production and Operations Management, 27(9), 1665–1669.
Gerrikagoitia, J. K., Castander, I., Rebón, F., & Alzua-Sorzabal, A. (2015). New Trends of Intelligent E-marketing Based on Web Mining for E-shops.
Procedia - Social and Behavioral Sciences, 175, 75–83.
Johnson, G. A., Shriver, S. K., & Goldberg, S. G. (2023). Privacy and Market Concentration: Intended and Unintended Consequences of the GDPR.
Management Science, (March).
Kjellberg, H., & Helgesson, C. F. (2006). Multiple versions of markets: Multiplicity and performativity in market practice. Industrial Marketing
Management, 35(7), 839–855.
Kumar, V. (2018). Transformative Marketing: The Next 20 Years. Journal of Marketing, 82(4), 1–12.
Larsson, S., & Vetter, R. (2021). Tillit i den datadrivna handeln. Handelsrådet.
Latvala, L. (2022). Thriving in the age of privacy regulation: A first-party data strategy. Applied Marketing Analytics, 7(3), 211–2020.
Long, L. (2022). Effective first-party data collection in a privacy-first world. Applied Marketing Analytics, 7(3), 202–210.
Martin, K. D., & Murphy, P. E. (2017). The role of data privacy in marketing. Journal of the Academy of Marketing Science, 45(2), 135–155.
Martin, K. D., & Palmatier, R. W. (2020). Data Privacy in Retail: Navigating Tensions and Directing Future Research. Journal of Retailing, 96(4), 449–
457.
Möller, K., Nenonen, S., & Storbacka, K. (2020). Networks, ecosystems, fields, market systems? Making sense of the business environment. Industrial
Marketing Management, 90, 380–399.
Ørngreen, R., & Levinsen, K. (2017). Workshops as a Research Methodology. Electronic Journal of E-Learning, 15(1), 70–81.
Polonioli, A. (2022). Zero party data between hype and hope. Frontiers in Big Data, 5.
Quach, S., Thaichon, P., Martin, K. D., Weaven, S., & Palmatier, R. W. (2022). Digital technologies: tensions in privacy and data. Journal of the Academy
of Marketing Science, 50(6), 1299–1323.
Avdelning/ar
- Centrum för handelsforskning vid Lunds Universitet
- Institutionen för tjänstevetenskap
Publiceringsår
2024-11-07
Språk
Engelska
Dokumenttyp
Konferensbidrag: abstract
Ämne
- Business Administration
Conference name
Nordic Retail and Wholesale Conference
Conference date
2024-11-05 - 2024-11-07
Conference place
Helsingborg, Sweden
Aktiv
Published