Why digital identity is central to the future of retail

GUEST BLOG: In this contributed blog post Ian Lowe, director of industry solutions for EMEA at Okta, discussed the role that identity will play in a digital-first retail future.

Even before the pandemic, retail was already in the middle of a revolution, driven by smartphones and high-speed wireless internet access. The pandemic accelerated this shift, with online sales growing by up to 40% and some companies doubling online capacity in months, according to the British Retail Consortium. In the process, it changed what customers anticipate and demand from retail channels. Digital identity is now central to delivering on what customers want and expect.

Customers are now demanding personalised shopping experiences, and want retail to be secure and relevant, regardless of whether they are shopping on their laptop, on a smartphone or in store. They expect speed and one-touch convenience both online and off, with any hint of frustration leading to abandoned shopping carts. For today’s consumers, availability trumps assortment: they care less about being able to choose from a large variety of products, and more about being able to buy right now, using whatever technology they want.

This has put digital identity front and centre for retailers hoping to remove the friction that can scare customers off. Digital identity is key to creating seamless omni-channel shopping experiences that today’s consumers value, where they can shop however, whenever and wherever they like.

In-store technology

Technology is becoming more important in-store as well as out. 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. This requires investment in customer experience technology, and identity is at the heart of this. In fact, almost three-quarters of retail tech leaders are planning to spend more money on in-store technology this year, according to Gartner’s research.

The old legacy, on-premise approaches to identity management are therefore not enough. And, inevitably will lead to dissatisfaction, as retailers struggle to create a ‘unified view’ of their customers and deliver the seamless, personalised experiences they desire. Ensuring all these moving parts connect together requires robust digital identity, so customers don’t face friction whether shopping in-store or via an app.

The personal touch

Customers also expect personalisation. 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. Failing to deliver on this can be fatal for retailers, with up to eight in 10 customers saying that they would abandon a well-loved brand after a bad experience, according to research by PwC.

IDG’s research in collaboration with Okta found that almost all IT managers recognise that identity management will be central to this digital transformation, with 91% saying that it would be a key enabler. Now, the responsibility falls to retailers to harness this opportunity by implementing the technology required to deliver the personalisation that customers desire.

Staying secure

The trade-off for such personalisation is that customers are entrusting retailers with their private data in return for convenience and more tailored services, so security is crucial. With an increasing number of breaches hitting the headlines, retailers need to protect customer data without making the experience so frustrating that customers head elsewhere. Managing digital identity is fundamental to doing this effectively.

Consumers understand the value of their data and believe its privacy should be protected, but this doesn’t mean they’re unwilling to share their data. Okta’s 2022 Digital Trust report found that 64% of people would be willing to trade their personal data for benefits such as discounts on a purchase, or admission to a public venue such as a bar, restaurant or pub. These answers reiterate that data has both monetary and utilitarian value. Essentially, people are more inclined to exchange their data for money, goods, services or other benefits when they believe they’re getting something worthwhile in return.

Identity can also streamline the way retailers deal with their suppliers and partners, offering the businesses they work with easy access to their systems, or enabling them to deliver cloud-based IT to partners, sharing common applications. Robust digital identity systems help to protect businesses against security breaches coming from the supply chain.

Retail has a bright future, both online and off. But in order for businesses to succeed, digital identity must be a central strategic pillar. Delivering the speed and personalisation that the post-pandemic consumer craves, while ensuring data stays secure.