Ian Lowe, director of industry solutions for EMEA at Okta, explains why digital identity is a crucial part of the future of retail – both online and offline.
Retail has been changing rapidly over the past decade, with customer habits altered forever by smartphones and high-speed internet access. The pandemic accelerated underlying trends which has led consumers to expect impeccable customer experience. In the space of just a few months, online retail spend in the UK increased by 48% to an estimated £113bn, according to Ofcom. When it comes to delivering the experiences that customers now demand, digital identity is a key ingredient.
Customers want shopping experiences fine-tuned to them that are always relevant and based on their preferences. They expect speed and one-touch convenience both online and off, with any hint of frustration leading to abandoned shopping carts. Consumers care less about being able to choose from a huge variety of products and more about being able to define their own customer journey – being able to buy what they want, when they want, and using their chosen technology channel to buy it.
Digital identity is front and centre
Retailers are competing to remove friction, knowing that this is what can scare potential customers away. This has put digital identity front and centre – it is key to creating seamless omnichannel shopping experiences and allowing consumers to shop flexibly, without physical or technological constraints.
Customers can experience friction at every step of their digital journey with a retailer. From having to fill in way too many fields at account registration, to remembering yet more username and password combinations and having to go through painful account recovery processes. Retailers who start with a strong foundation in customer identity are better placed to deliver exceptional customer experiences. They have the flexibility to easily adjust and test new experiences, such as reducing the number of fields needed during account registration or trying progressive profiling and automating account recovery.
Retailers which offer the best user experience in this tech-driven world have the happiest customers. Investing in cloud identity technologies that make customer journeys simple is a fail-safe way for retailers to stay ahead of the competition. But far too many are still failing to engage with digital identity.
Bricks meet clicks
The divide between bricks and mortar retail and online shopping is narrowing, with technology driving new experiential activations in physical stores. For retailers, this combined with a 360° view of customers can open up new marketing and cross-selling opportunities, offering business insights to drive long-term strategy. It also helps to build trust between consumers, no matter their preferences, and the business.
In-store technology is also becoming a key selling point for retailers, in a way that e-commerce once was. In 2019, Gartner predicted that by 2023, e-commerce would cease to be a differentiator for retailers because it would be ubiquitous. Customers now expect to be able to search, find and consume products across a retailer’s ecosystem – on an app as easily as in-store. This requires investment in customer experience technology, and identity is at the heart.
Perhaps unsurprisingly, Gartner’s research showed that most retail leaders plan to spend more money on in-store technology in the coming year. With customers needing high-tech experiences, legacy on-premise approaches to identity management are not enough to keep up. Refraining from modernising will inevitably lead to dissatisfaction, as retailers will struggle to create a unified view. Robust digital identity is fundamental to ensuring all the parts of the modern retail experience click together, and that customers enjoy a frictionless journey through a purchase, however they decide to shop.
Rewards for loyalty
Personalisation has become essential for consumers and delivering tailored experiences is no longer a ‘nice to have’ in retail. Customers want brands to know them and reward them for their loyalty, serving up favourite choices when logged in, and delivering personalised technology-enabled services both in-store and online. Up to eight in 10 customers say that they would abandon a well-loved brand after a bad experience, according to research by PwC, showing how failing to deliver the personal touch can be fatal.
Identity management is crucial to delivering reward systems such as this. IDG’s research in collaboration with Okta found that almost all IT managers recognise that identity management will be central to retail digital transformation, with 91% saying that it would be a key enabler. Retailers, therefore, need to take advantage of this opportunity and embrace identity management technology to deliver the experiences their customers want.
The trust element
Big data can also help organisations derive insights around geographical trends, buying behaviours and product preferences to deliver customised encounters with consumers. This can drive sales in both the short-term and long-term, and offer retailers ways to differentiate themselves from the competition. But the systems that deal with such data are increasingly targeted by criminal gangs.
Customer credentials and the identity layer are a tempting target for cybercriminals, with statistics showing that 61% of all breaches involve lost or stolen credentials. Modern identity and access management techniques can offer a way to keep customer data out of the hands of bad actors.
Starting with a strong foundation in identity retailers can enhance the login experience through the use of biometrics built into their customer devices. They can also easily adopt social login, where customers don’t have to remember an additional username and password combination, they can use an existing credential from an approved social provider. With a strategic approach to identity, retailers can easily adjust security in the background and continuously assess threats. For example, turning on/off additional security like captcha can reduce the number of fraudulent account registrations and multi-factor authentication can further protect customer accounts.
Today’s customers are savvy and aware of the value of their data, and are demanding digital trust in retailers to protect their privacy. Okta’s 2022 Digital Trust report found that 64% of people would trade their data for benefits such as discounts on a purchase, or admission to a public venue such as a bar, restaurant or pub. This goes to show that data has both monetary and utilitarian value. People will exchange their data when they believe they are getting something valuable in return, be that money, goods, services or other benefits. It’s a toss up between security and usability, in that retailers need to protect data without making the experience so frustrating that customers fail to go through with a purchase.
The end of passwords?
Reassuring customers that their data is secure is vital to not only building trust, but also to drive loyalty. In a survey with Retail Week, it was found that 58% of consumers said that the vulnerability of usernames and passwords was a leading cause of concern while shopping online.
It’s the ‘traditional’ security measures surrounding online and hybrid shopping experiences that customers particularly hate and which lead to a final purchase not being made. In Okta’s research, half of customers cited long sign-up forms and overly complex password requirements as their leading frustrations with the shopping process.
The survey also found that most organisations have switched to cloud-based customer identity and access management (CIAM). Tools such as single sign-on and multi-factor authentication can help retailers eliminate passwords and complex forms that customers despise, and remove the barriers between sale and purchase, with tools working quietly in the background to ensure that every user, device and IP address is verified.
Untangling the supply chain
The supply chain disruptions caused by the pandemic caught many organisations by surprise. Retail was one of the industries worst-hit by the crisis according to Deloitte, with customer experience and brand reputation suffering directly from the hit to logistics operations.
It highlighted the lack of control and visibility that many retailers have over the technologies that suppliers and partners use, and their vulnerability to unexpected disruption. Research by Venafi found that 82% of CIOs say their organisations could be vulnerable to cyberattacks on their software supply chains. An identity-first approach can streamline the way retailers deal with their suppliers and partners, offering the businesses they work with easy access to their systems. Whilst also enabling them to deliver cloud-based IT to partners, and share common applications.
Robust digital identity systems and a strategic approach to identity help to protect businesses against security breaches coming from the supply chain. Cloud-based identity platforms mean that retailers can cut the risk of data breaches targeting the supply chain network, with tools such as Single Sign-on (SSO) and Multifactor Authentication (MFA) providing a way to take control of access management. This offers a secure ‘front door’ which can be accessed by any user along the supply chain network, regardless of where they are or what device they are using.
The future of retail
Technology enthusiasts have been too keen to write off bricks-and-mortar retail. Both online and offline retail have a bright future, enabled by technology. But, businesses in the sector cannot afford to leave digital identity as an afterthought.
Customers demand speed, convenience, personalisation, and a shopping experience that securely protects their data. Digital identity management is the way retailers can deliver this, ensuring customers keep flocking to their doors for years to come.