Loyalty programs are an important part of many retailers' business strategies. They help encourage additional purchases, draw shoppers back into brick-and-mortar locations, gather customer data and often enable the personalization that many consumers crave. While Mintel reported that enrollment in these initiatives is up for all retail categories, it also found that many customers (32 percent) are concerned about how tracking their purchases might affect their privacy. 

The inherent contradiction between consumers' desire for privacy and personalization may come as a surprise to some retail industry professionals, but 13 percent of loyalty members are frustrated with the amount of information requested of them, and 10 percent want more control over their privacy in their programs.

Additionally, some consumers (16 percent) do not think their loyalty programs represent their shopping habits, and 20 percent of the millennials polled are even more likely to believe this. A few of these customers may believe that they are offering their personal information without receiving anything in return, which may need to be addressed by merchants. 

"Reassurance of privacy is undoubtedly a key strategic tool in loyalty program engagement, but there is a paradox at play here between personalization and privacy," said Ika Erwina, retail and technology analyst at Mintel. 

Responding to shoppers' concerns
While there are a number of potential solutions to the privacy issue, a greater degree of transparency may reduce some consumer concerns. However, many of the features that consumers most appreciate in loyalty programs do not rely on personal data. According to Mintel's study, the most important attributes to loyalty members are the convenience of receiving rewards and earning points, as well as monetary rewards. Those benefits that are more reliant on personalization, like exclusive deals and coupons, still matter to shoppers, but not as significantly. 

Disentangling privacy and personalization may be difficult, but enhancing convenience should not be. Nearly 30 percent of respondents to Mintel's survey reported that they lack the time to redeem their loyalty points. Providing multiple options to do so, such as at the point of sale, through ecommerce channels and other methods can overcome this matter. Emphasizing these features over more data-driven benefits could assuage some consumer concerns. For younger shoppers, focusing on social and environmental problems may also be helpful, Mintel suggested.