An optimistic outlook from the National Retail Federation (NRF) spells good news for retailers. Its economic forecast projects 6.5% to 8.2% growth to more than $4.33 trillion in 2021, as more individuals get vaccinated and the economy reopens.
Although these figures paint a positively thriving retail scene, a record 12,200 U.S. stores shut up shop for good in 2020. Household names like J.C. Penney, Lord & Taylor and Neiman Marcus were forced to file for bankruptcy after being slow to adapt to the challenges brought on by the pandemic. Even those retailers that weathered the storm aren’t out of danger, with third-party cookie data deprecation already spelling trouble for those that haven’t found a better way to understand and engage consumers.
Failure to Adapt Comes at a High Cost
Many retailers still rely on third-party cookie data to power audience targeting, personalization and measurement strategies. While the industry is buzzing about third-party cookie sunset moves by Google and Apple to eliminate or severely inhibit their use, less than half feel prepared for the change.
Google’s decision to delay the third-party cookie sunset until 2023 may give retailers more time, but there’s still a broader reckoning coming. The reality is, this type of data historically has been not very well aligned with privacy in general and presents a number of issues in terms of consent and compliance with privacy regulations like GDPR and CCPA. In fact, GDPR violations are already coming at a high cost to retailers, with one multinational fashion chain recently fined an eye-popping €35.3 million ($41.8 million) for its data privacy shortcomings.
But money and reputation aren’t the only things at stake when consumer data isn’t collected and managed with a privacy-first approach. Marketing, customer experience and other teams risk losing control of the data and technology they need to improve the way they engage with customers and drive growth. When data ownership is exclusively in the hands of internal IT teams, it slows growth-focused teams and can damage the customer experience.
Act Now to Mitigate Data Loss
With signs pointing to privacy as a competitive differentiator, the time is now for retailers to make the shift away from third-party data to consented first-party data. It’s collected directly from your customers with their explicit consent, usually based on a mutual value exchange. When collected from online and offline sources and unified into a single customer view, it can provide unique insights into each customer and segment, including shopping behaviors, channel and product affinity, loyalty and consent status, lifetime value and more.
These rich customer insights can be used to execute core digital marketing functions, such as multi-dimensional segmentation, as well as more advanced functions, such as cross-channel lifecycle marketing orchestration and predictive modeling and analytics. And since first-party is unique to each company, it can be used to create personalized experiences that no competitor can replicate.
Creating Opportunity From Data Disruption
For retailers like VF Corporation that have already embraced the move to first-party data, the strategy is paying off. As the parent company to brands like Timberland and Vans, VF Corp wanted to implement an organization-wide, customer-centric strategy and was looking for a technology that would enable activation of first-party data in marketing, address consumer privacy concerns and support sophisticated customer analytics.
By implementing a customer data platform (CDP), the retailer was able to create a corporate-level view of its customer data while giving each of its brands access to a unified customer profile database. Using unified, actionable first-party data, VF Corp has been able to better understand who its customers are and how they prefer to be contacted and engaged, while also respecting their data privacy.
In addition to delivering better customer experiences that translate into better business outcomes, VF has also been able to drive workflow efficiencies across the business. For example, it can now build its own dynamic, multi-dimensional segments based on demographic, behavioral, affinity-based data, customer lifetime value and other scoring. From there, it can send those segments to their activation channels instantaneously, without the delay or added cost of external database management.
Retailers that are still using third-party data to drive growth won’t be able to sustain that trajectory for much longer. Seismic changes are coming from the cookie sunset that will have a drastic effect on how retailers understand and engage with customers. With first-party data about to become a strategic business imperative, the time to act is now.
Michele Szabocisk is VP of Marketing for BlueConic