Social networking: the new retailing?

The KPMG/Synovate Retail Think Tank’s latest research discussed the internet and concluded it now forms an integral part of UK retailing. Although still a relatively small part of the whole retail market – somewhere between six and eight percent

of the total – online is now about much so more than transactions.

Taking into consideration 10 million (and rising) Twitter users, and the fact that China’s social network explosion is led by teen-targeted website QZone which claims to have 200 million registered accounts, and the power of social networking and communities starts to become clearer.

  Beyond being a channel for transactions, the internet has created a powerful marketing tool and a huge “shop window” for products, provides valuable brand-building opportunities, increased profile through third party tie-ups and most importantly a new, constantly evolving and different communication mechanism.

As the power of social networking and online communities’ increases, consumers are sharing thoughts and ideas, particularly within fast moving sectors such as fashion, meaning that we are seeing a fundamental shift in the way people shop and the consumer being increasingly complex for retailers to understand.

From the retailer’s perspective, this environment presents a number of challenges and it is important to be clear about how they will embrace and continue to respond to this new and fast-moving environment. Many businesses are linking up different parts of their operations that may have developed separately up until now, thus moving from an online offering to being truly multi-channel. There is also the need to ensure return on the investment made in further developing their multi-channel offer and consider how they make effective use of the customer information it may provide.

And the strongest retailers will spot the less obvious opportunities to develop their offer through the customer insight the new data brings. A report by the Chief Marketing Officer Council found that of 500 senior marketeers surveyed, only 16 percent review online sources for comments, complaints and suggestions, despite almost 58 percent agreeing that online media – such as blogs, Twitter and other social networking outlets – have a major influence on customer expectations and buying attitudes.

So yes, the platforms might be changing but the fundamentals of retail remain unchanged – understanding the consumer and giving them what they want will always be the winning strategy.

Image: Social networking sites
Source: Helen Dickinson KPMG