#3 Google hits pause on cookie phase-out: What this means for retailers

Hey there! Welcome back to another Retail Radar, your go-to source for staying on top of the latest trends in retail.

If you’ve been keeping up with the recent news in digital marketing and privacy, you’ve probably heard a lot about cookies—specifically, third-party cookies—and how their days are numbered.

In this issue, we’re taking a closer look at Google’s unexpected announcement this summer. Despite years of investment in their Privacy Sandbox project, they’re hitting the brakes on phasing out third-party cookies in Chrome. This twist has led some to wonder: could the third-party cookie make a comeback, or is it just a short delay before they're gone for good? And what does this mean for retailers? Let's dive into the details and explore the implications for your business.

A brief recap

Today, almost all major web browsers, except for Google Chrome, have stopped supporting third-party cookies. Browsers like Safari, Firefox, and Microsoft Edge have blocked these cookies by default to better protect user privacy. Safari and Firefox led the way in this movement, setting the stage for a broader industry shift.

While third-party cookies are still present in many online experiences, a growing number of users are now browsing the web in environments where these cookies are restricted or blocked—particularly on browsers like Safari and Firefox, which have implemented stricter privacy measures. Google Chrome is the only major browser that still fully supports third-party cookies, even though many thought it would have phased them out by now. For retailers who rely on third-party cookies for tracking and targeting customers, this shift is already making waves. Cookieless browsing is becoming the norm, and it’s forcing businesses to rethink how they engage with users in this new privacy-first era.

Why the hold-up?

So, why hasn’t Google pulled the plug on third-party cookies yet? For years, Google has been crafting the Privacy Sandbox—a solution that promises to protect user privacy while still giving advertisers the tools to target effectively. But as you may have noticed, things haven’t exactly gone as planned.

After multiple delays and years of investment, Google announced this summer that third-party cookies will stick around in Chrome—at least for a little while longer. The Privacy Sandbox has faced significant obstacles, particularly from the UK’s competition authority, which has raised concerns over the impact on market competition. While privacy concerns have also been a challenge over the years, it's the regulatory pushback that appears to be the main factor behind the delays. Despite Google’s assurances that the end of third-party cookies is still in sight, it’s clear that the transition is taking longer than originally expected.

While Google works to balance privacy concerns and advertising needs, retailers can't afford to wait. The longer the transition takes, the greater the risk for retailers who rely heavily on third-party cookies for tracking and targeting. They need to start adapting now.

What does this mean for retailers?

So, what does this mean for your retail business? Is the third-party cookie making its way back? Should you pause your plans to adapt to a cookieless future? The answer is: not exactly. While Chrome’s support for third-party cookies has been extended for now, the overall trend is still toward greater privacy and less reliance on these tracking tools. The end of the third-party cookie is inevitable.

The urgency is real. According to recent research, the number of brands actively preparing for the end of third-party cookies has jumped from 56% in 2021 to 72% in 2023. Retailers can’t afford to sit back. Now is the time to invest in first-party data and craft strategies that will future-proof your business.

And the stakes? They’re sky-high. Depending on your customers' location and the devices they use, you could lose the ability to identify 40-60% of your traffic. This makes it even more critical to explore alternative strategies now rather than waiting for the final curtain call.

The reality is that third-party cookies are already unreliable, and their eventual disappearance is unavoidable. The key for retailers is to fast-track efforts to gather and leverage first-party data. This data is now your most valuable asset for personalizing experiences and building strong customer relationships. Some forward-thinking brands are even tapping into new revenue streams by monetizing their customer insights through retail media.

However, as data sharing and collaboration intensify, staying compliant with privacy regulations is crucial—not just with GDPR, but also with the upcoming ePrivacy Regulation, which directly affects cookie usage across the web. Getting it right is non-negotiable.

The shift to first-party data: Why it’s still essential for retailers

As the end of third-party cookies approaches, one thing is clear: the future of retail marketing lies in first-party data. With third-party cookies gradually being phased out, retailers need to pivot their strategies now to stay ahead of the curve. The good news? There are significant upsides to embracing first-party data. Let’s break down the top five benefits:

• Enhanced customer personalization: As you know, first-party data gives you direct insight into your customers’ preferences, behaviors, and shopping patterns. This allows you to create highly personalized shopping experiences, offering tailored product recommendations, targeted marketing messages, and exclusive offers that truly resonate with each, individual shopper. When personalization hits the mark, it boosts engagement and strengthens customer loyalty.
• Greater data accuracy and control: Since this data comes directly from your customers—whether through your website, loyalty programs, or CRM systems—you can trust its accuracy. Unlike third-party sources, first-party data is reliable, and the best part is that you control it. You decide how it’s collected, stored, and used, ensuring it aligns with your brand values and customer expectations. This control also allows for more dynamic and flexible marketing strategies, as you can respond quickly to customer behavior in real-time.
• Improved customer relationships: First-party data helps you build stronger, more direct connections with your customers. By using their data responsibly to enhance their experience (rather than sharing it with third parties), you strengthen trust in your brand. ?When customers know you’re prioritizing their privacy and personalization, they’re more likely to stick around—and keep coming back. In the long run, these trust-based relationships can lead to higher customer lifetime value and increased brand advocacy.
• Cost-efficiency in marketing: Working with first-party data allows you to refine your targeting, leading to more efficient marketing campaigns. You can focus on reaching your existing customers and high-potential segments with precision, reducing the costs associated with broad, less-targeted advertising. Higher accuracy means better ROI.
• Adaptation to privacy regulations: As regulations like GDPR and the upcoming ePrivacy Regulation tighten, relying on first-party data ensures you’re working with consented, compliant information. This minimizes the risks associated with third-party data breaches and violations. Staying compliant keeps you on the right side of the law and positions your brand as trustworthy and customer-centric.

Building strong customer relationships: The win-win effect

Creating strong relationships with your customers isn’t just about improving personalization or driving sales—it’s about forming win-win partnerships that benefit both your business and your customers. As we've discussed, first-party data is more than a tool for compliance and personalization; it’s the cornerstone of building lasting, meaningful connections with your audience. While loyalty might look different for every retailer, one thing is clear: brands that prioritize consistent, impactful communication with their customers are seeing big rewards.

In fact, our latest Retail Radar annual report highlights just how advantageous these relationships can be. When brands stay actively engaged with their customers, the results speak for themselves:

• 30% lower return rates: Customers who have received communication from a brand in the past year return items 30% less often compared to those who haven’t. This indicates that engaged customers are making better-informed purchasing decisions, which results in fewer returns and higher satisfaction for both the customer and the brand.
• 25% greater discounts: Customers who stay engaged with your brand typically receive discounts that are 25% larger on average than those who are less engaged. This shows that maintaining a connection with your brand can lead to better deals, rewarding loyal customers with exclusive offers, and strengthening their relationship with your store.

By building and nurturing these connections, retailers can create a cycle of loyalty and satisfaction that smooths the shopping experience and encourages repeat business. Communication is the key to unlocking these win-win relationships, and there’s no better time to make it a priority in your strategy.

What's your take? See you in the comment section!