Towards privacy-aware personalization practices in retail

Extended abstractNew technologies have enabled an unprecedented level of data collection, enabling retailers to providepersonalized experiences as part of their strategy to deliver better customer value and managecustomer relationships. At the same time, increasingly intrusive data collection techniques have raisedsignificant privacy concerns among consumers and regulators. The result is an increasingly complex andevolving legal and regulatory environment that significantly constrain how retailers can collect and usecustomer data in marketing and other consumer-facing activities. While consumer-focused andregulatory research attempts to guide retailers, we know little about the actual day-to-day operationaland strategic challenges retailers face in simultaneously complying with privacy regulations andpersonalization. This paper focuses on these day-to-day challenges.While considerable attention has been paid to consumer-centric research on privacy andpersonalization, few have explored the operational and strategic challenges posed by the “impossiblesituation” created by 70 % of consumers reporting frustration with lacking personalization, while 70% ofconsumers are concerned about firms’ use of customer data (Martin & Palmatier, 2020). Much of privacyresearch has focused on exploring consumer’s attitudes towards privacy and their benefit-trade-offcalculations 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 aregulatory and legislative perspective, such as the privacy implications of the General Data ProtectionRegulation (GDPR) (Andrew & Baker, 2021; Johnson et al, 2023) or how to gain consumer trust in datacollection technologies (Larsson & Vetter, 2021). With the increasing use of big data and AI algorithmsfor knowledge discovery, pattern and trend recognition, and prediction of consumer attitudes andbehaviors, emerging digital technologies may further increase privacy concerns among consumers andregulators (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 witha managerial firm-performance perspective, and backed by numerous studies demonstrating that retargetingand 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 onpersonalization, and thus first party data strategy (Latvala, 2022; Long, 2022) and zero party datastrategy (Polonioli, 2022) being proposed to address the challenges of collecting data from consumersamid growing privacy concerns. However, these studies dangerously assume that firms are mature toimplement 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 orpersonalization respectively, surprisingly few have explored the experiences and practices that haveemerged as a response to the privacy-personalization paradox in the retail market. The aim of this paperis therefore to understand the challenges faced by retailers today because of the conflicting tensionbetween the need for customer data and customer privacy concerns. The paper reports work-inprogressfindings from an ongoing research project that explores the challenges retailers face and howthey are addressing them. Questions addressed include: What are strategies that companies canimplement to soften the privacy tension? How can retailers operate with privacy-aware personalizationpractices?The paper uses a market shaping approach; which allows us to analyze the influence of a single activityby 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 structuralchanges on the market, but also cognitive and behavioral changes such as for example consumerperception or behavior changes (Kjellberg & Helgesson, 2006). The market shaping approach helps usunderstand how privacy strategies and their influence on various actors shape the retail market, directlylinking firm-level changes to market-level impacts.The data collection is based on workshops combined with a multiple case study. The workshop allows aplatform to take shape where researchers can explore themes that emerge collaboratively between theparticipants. It provides researchers with access to a better understanding of topics that may nototherwise be obvious to a participant in a one-on-one setting (Ørngreen & Levinsen, 2017). The multiplecase study involves in-depth interviews with managers in retail companies. The interviews identifycommon tensions and challenges, as well as components for strategic solutions to the tensions causedby privacy-related regulations and consumer privacy concerns. The multiple case study identifiespatterns and regularities across the interviewed companies to develop and identify general insights thatcan later be tailored to the retail industry.The paper will contribute to the literature on personalization and privacy and provide retailers with adviceand knowledge to navigate an increasingly complex context of privacy and personalization challenges. Itwill provide important and relevant findings that can, on the one hand, empower individual retailers tonavigate the increasingly complex technological and regulatory landscape regarding privacy and, on theother hand, inform a wide range of actors that are involved in decision-making processes shaping theregulatory, technological and market environment. The identified market-level processes arising from thetensions between privacy and personalization and their impact on firm behavior will enable retailers toparticipate actively in the policy debate on the personalization-privacy paradox and be betterrepresented as actors that are affected by market-level changes within regulation and law. As privacy isincreasingly regulated and a topic for political debate, our findings will also provide a knowledge base forlegislators, associations, and consumer organizations to further inform the dialogue on privacy issues inthe retail market.Selected referencesReferencesAndrew, J., & Baker, M. 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