In its “Global powers of retailing 2010: Emerging from the downturn” report released yesterday, Deloitte identified several effects social media will have on retail businesses in 2010.
Indeed, social networking has the potential to revolutionize the industry by empowering consumers, whose technological learning curve is quickly disappearing. Many retailers are lagging behind their customers’ rapid evolution, however.
1) Trust Economy
The first effect Deloitte identifies is the need for increased transparency. Social media is changing the communication landscape from broadcast mode to conversation mode. As such, consumers will increasingly demand greater access to product and pricing information, leading to a seller’s auction where pricing will be determined by the most desperate retailer.
2) Referral Economy
The second effect on retailers from social media is the ease and ubiquity of peer referrals. It’s now possible to send a Tweet from your smart phone while standing in a store and ask your own peer network for their opinion on a particular product. In addition, friends can easily and instantly refer information on deals, bargains, sales, etc…
3) Buyers’ Economy
It used to be that shoppers had to rely on store employees for assistance and information regarding products. Networking is empowering shoppers with a level of knowledge never seen before and will pressure retailers to provide training to employees so that they are at least as knowledgeable as the shoppers.