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Brands and retailers have more data than ever on consumers. Increasingly, this presents the promise that they'll be able to put it to work to tailor shopping experiences so that people find more of the exact products they want, and move to checkout without a second thought.
It all points toward fast-moving advances in personalization, shifting the experience of shopping online from one that is geared toward the many, to one that delivers for you.
The push toward personalization has been around for years, but the latest advances in technology could open up a new and more expansive phase of the movement. In particular, new AI tools that enable conversational experiences and powerful data analysis point toward a near future where shoppers can ask for what they want, and have it delivered in minutes.
But in the midst of the excitement, it’s worth asking whether consumers are ready to change at the same pace as innovation.
That’s what CI&T did with The Art & Science of Personalization, a new report that surveyed 540 consumers about their preferences for more customized shopping experiences.
The takeaway: Consumers are sending mixed signals as they weigh privacy, control of the shopping experience and just how individualized they’d like shopping experiences to become.
To learn more about the tradeoffs that consumers are considering as shopping experiences are reshaped, The Current spoke with CI&T Director of Retail Strategy Melissa Minkow.
“What I set out to do with this report was figure out, how can you achieve efficiency and engagement in shopping experiences via personalization in a way that resonates with consumers’ comfort levels?” Minkow said.
Here’s a look at several of the key issues raised by the findings:
There’s a tension at the heart of the digital commerce experience: Consumers want choice and convenience, but remain skeptical of surrendering data in return.
This privacy push and pull has long animated the discourse around digital advertising. CI&T’s survey found that it is continuing to extend to personalization of the shopping experience, as well.
The survey found a majority of consumers (58%) believe that data sharing is necessary for personalization. Yet a far greater number of respondents (87%) said that it’s essential for retailers to ask for permission before they collect that personal information.
Still, 56% of respondents said they are excited, as opposed to uncomfortable, with the idea of a retailer using their personal information to personalize the shopping experience.
It shows consumers are of two minds on this tradeoff.
“There's acknowledgement that they need to share data,” Minkow said. “But there's also this acknowledgement that they don't like sharing data.”
They’re also particular about how they want to share data. When asked which perks they would be willing to trade personal information for, the top three responses centered on finding exact product attributes, enhancing search and locating the right pricepoint. It gets at another mixed signal, the report states: “Shoppers do not want brands to know their annual household income, but they do want discounts and low prices.”
Unique vs. individualized
In any conversation about industry trends, it’s worth remembering that consumers don’t think about industry terms such as “personalization.” They only think about buying stuff.
So there’s a lot to learn by actually posing the idea of personalization to consumers, and asking them what they think of it.
Again, CI&T found there were mixed reactions in this area.
For one, consumers have different ideas about what personalization means.
When asked about the definition of personalization, the survey found that 29% of respondents believe that it means “getting a unique experience that is designed for me and people like me.” Meanwhile, 20% agreed that it means something more specific: intentionally sharing personal data in exchange for a unique shopping experience.
It’s a reminder that not all consumers are thinking about the data tradeoffs taking place.
When it comes to how that data is used, CI&T’s survey also found that preferences are mixed: 52% of respondents prefer that a retailer personalize a shopping experience to a group, while 48% believe that experiences are tailored to the individual.
This again highlights that there are underlying concerns about privacy at the heart of the personalization shifts taking place.
The results indicate that there’s a disconnect between what brands and retailers are doing, and what consumers understand about what they’re doing. Minkow believes more communication from brands and retailers could serve as a bridge, especially as technology moves faster.
“There's a massive elephant in the room here,” Minkow said. “If retailers just had more transparent dialogue with shoppers, I think they could get a lot further [with] the data that they're able to collect and the experiences they're able to provide. But because the conversation isn't happening, there's this wall being put up by shoppers because they're weirded out by what retailers are collecting without talking about that first.”
Consumers still want to shop
Retailers also may want to take a step back and consider the ways in which they deploy personalization. The findings underscored that consumers aren’t quite ready to give up complete control of their shopping experience.
Consumers indicated they are interested in a personalized search process. But there wasn’t much interest in personalized landing pages that show items selected for them. The survey found that 47% would rather first be shown the same website everyone sees, then navigate to the type of item they want with filters. Only 15% want to “automatically be shown a web page with the products that the retailer thinks I would be most interested in.” Plus, survey results indicated that consumers aren't yet ready to fully embrace virtual shopping assistants provided by brands.
Online shopping has introduced plenty of new tools for efficiency that are designed to show a shopper exactly what they want. But it has also given consumers tools that allow them to do their own research and browse endlessly without leaving their couch.
Shoppers may be able to get recommendations instantly, but they're still willing to put the time in to find things themselves. In a world of constant marketing, they also still want to consider all of the information that's available about a product before they choose to click buy. They may even be delighted by finding something they didn’t know they wanted along the way.
In other words, people still like shopping. There's a difference between showing people products they like and letting them make a decision, and finding the exact thing they want by mining their behavior without asking.
“The majority of consumers said they are excited by the idea of personalization, but you have to really get it right,” Minkow said. “You can't just hyper-personalize everything.”
Trending in Shopper Experience
Consumers believe virtual try-on, in-store robots and cashless payments are poised for growth, according to Klarna.
What will retail look like in 2041?
That was the question posed by Klarna as it set out to consider the future of retail. Teaming up with Kate Hardcastle (aka The Customer Whisperer), the payments and shopping service set out to identify the key tech advances that will change shopping.
To do so, they asked 5,000 customers in five countries about how they believe their shopping habits will change in 18 years. By that time, Gen Z will be 40 and joining millennials as the top consumer groups.
The Future of Retail report findings indicate that consumers believe many of the emerging technologies that are only beginning to find a foothold in commerce today will become more widely used. Interestingly, the shoppers surveyed do not believe brick-and-mortar retail will disappear. While they believe virtual try-on will become more common, consumers also open to in-store robots providing help navigating the store. The post-pandemic period taught us that in-store shopping remains popular, but this survey provides an indication that the experience will need to continue to evolve to meet consumer expectations.
“Technologies like augmented reality have the potential to transform rundown physical shops and revamp the in-store experience for shoppers," said Hardcastle, in a statement. "Klarna's latest research shows that consumers want greater convenience and a more personalised shopping experience – and seamless technology must be at the heart of this."
Here’s a look at five technologies that are set to grow in retail, according to the survey:
According to the survey, 65% of consumers want the shopping experience to become more personalized in the future, and 36% expressed certainty that their wishes will come true, noting that this will occur across both in-store and online.
Klarna noted that this future is already on view in China. In that country, 80% of online purchases are already driven by personalized recommendations. That's compared with 20% in the western world. The survey findings indicate Western consumers want an experience that is more like that in China, at least when it comes to recommendations.
The way we try on clothes may be in for a big change. About half of the consumers surveyed believe they will try on clothes in the same way as today. So what will replace the dressing room? The survey states that 48% want to use virtual dressing rooms, 28% want to use augmented reality and 23% believe they will rely on AI to provide recommendations on the clothes that match their fit and style.
Shopping assistants (including robots)
The in-store experience is also set for transformation when it comes to assistance, the survey found. The survey found that 59% of shoppers are open to the idea of a robot approaching them in-store, and another 18% will consider it depending on how the robot looks, or behaves. They could take measurements, or recommend styles.
Meanwhile, there’s also interest in accessing more advice with online shopping. The survey found that 34% of shoppers want access to virtual “personal shoppers” online. These assistants would provide recommendations based on a consumer’s taste and style.
Augmented and virtual reality
Augmented reality, which describes experiences that superimpose digital imagery onto physical environments, is set to gain use across shopping settings in the coming years, shoppers believe. The survey found that 81% of respondents believe this technology will enhance their in-store shopping experience, while 37% think the technology will eventually become standard across online retail.
But despite today's talk of the metaverse, consumers still see a limit to these technologies. The survey found that 43% of Gen Z'ers (43%) believe that shopping in virtual reality (VR) will come to overtake the real-life shopping experience within the next two decades.
Retailers are already offering a growing number of payment options as more consumers pay with their phone. In the future, consumers think the push beyond hard currency will continue. The survey found that 64% of Gen Z and millennials agree that the majority of physical stores will be completely cash-free within 18 years. Further, 31% believe that the shift will occur in five years or less.
What does ChatGPT think?
Klarna asked AI-powered chatbot ChatGPT about its own predictions. Here’s the response:
“The biggest change for consumers when they shop in 2041 will likely be the widespread use of augmented reality (AR) and virtual reality (VR) technologies, allowing them to virtually try on products and experience them before making a purchase. Additionally, personalized recommendations based on their past behavior and preferences will become even more accurate and prevalent, making shopping experiences more efficient and tailored to individual needs.”
It sounds like following the survey results will put brands and retailers on the right track.