Social media: retailers react to consumer interaction
Many food retailers command an extensive following on social media
The world's retailers are increasing their use of social media to promote offers and interact with consumers. However, shoppers also use networks to interact with each other, which can benefit business but is also eroding price as a weapon of competitive advantage.
Social media is being used more frequently by many of the world’s major food retailers and with good reason. Data from the US-based SOS eMarketing indicates almost a third of online consumers visit the Facebook pages of retail companies at least once a month. In a tough economic climate, many are searching for specific sales promotions, as well as seeking more information regarding certain products, on issues such as provenance and not just price.
Shoppers who actively interact with the Facebook and Twitter pages of supermarket chains display a much greater likelihood of shopping there, while other research claims that 46% of people visit stores more often as a result of using a retail-branded app. Social media carries the added attraction for food retailers in its usefulness in driving traffic to their own websites, as well as providing information on what shoppers are looking for in their stores.
Many food retailers command an extensive following on social media – Wal-Mart Stores had over 17.5 million Facebook fans as of July 2012, compared with over 232,000 Twitter followers.
As evidence of their commitment to increasing their digital and social media expertise, some leading food retailers have acquired industry specialists of late. Wal-Mart purchased the US social networking firm Kosmix for US$300m in 2011. Sainsbury has also made acquisitions in this area, examples of which include Global Media Vault (GMV) and the e-book company Anobii.
Like food manufacturers, communication and connecting with consumers remains one of the core reasons for retailers taking up social media. Increasingly, this is being done at a local level, with companies launching Facebook pages for their individual stores, thereby enabling them to share news of in-store promotions and local trade events with their customers. Many companies use specially-trained dedicated store employees to handle this side of the business.
One of the pioneers in this area is Wal-Mart, which has dubbed this strategy "social-local". During 2011, the company launched a Facebook app which connected consumers with their local outlets and delivered store-specific information to them. Wal-Mart also launched new apps for the iPhone and iPad, which assisted consumers with planning their shopping trips. Features included touch-optimised shopping, browsing for availability of groceries and budgeting tools.
Another use of social media has been to involve customers in the promotion of retailers' products. One major effect of the advent of social media is that consumers have recognised they have a voice of their own, as well as an audience for their viewpoints. Food retailers are increasingly recognising social media users are highly likely to chat to others about in-store experiences, products, promotions and suchlike. Greater amounts of customer feedback are now being sought – for example, Asda's PR office now has live Twitter feeds to obtain customer opinions, both positive and negative.
One recent example of businesses encouraging social media users to act as brand advocates was a new initiative from UK retailer Tesco. This summer, it has offered customers Clubcard points to Facebook users who recommend its products. The scheme works though its Share & Earn app, with customers posting products they 'like' to their Facebook walls. This enables Tesco to make use of the product recommendations people often share with their families and friends, although one criticism is that this scheme may lead people to shop from Tesco Direct without shopping around first.
In a similar vein, US retailer Kroger has been encouraging its shoppers to communicate and blog on social networking sites about its own-label lines. Free groceries are offered as incentives for those people selected.
Similar tactics have been employed by Waitrose in the UK. The upmarket retailer's recent recipe-sharing initiatives have also proven popular, as illustrated by its social media activity after a marketing campaign featuring celebrity chef Delia Smith leading up to Christmas 2011. The adverts had garnered 274,000 views during a two-week period on YouTube.
Social media can also be useful as a PR tool. In 2011, a generous response from Sainsbury to a three-year-old girl's letter about tiger bread later went viral and was shared across several social networking sites. A subsequent Facebook campaign calling on Sainsbury to rebrand tiger bread as giraffe bread was 'liked' by over 1,000 people, on account of its spontaneity and generosity.
However, there have been some instances where social media has not worked well. During 2011, social networks were instrumental in forcing Tesco to drop its 'Double the Difference' campaign, where consumers were guaranteed a bonus if they found cheaper groceries elsewhere. Social media websites such as Twitter and Facebook were used to spread the news about which groceries were cheaper and where amongst the online community, leading the UK's largest retailer to later cap the value of its vouchers at GBP20.
And that episode highlights how social media, as part of the broader online channel, is making price a less effective point of difference between retailers. Mike Coupe, Sainsbury's commercial director, told just-food last autumn price was no longer a competitive advantage in the grocery sector, with the rise of the online channel meaning prices were more transparent. Other dimensions in the marketing mix such as service, quality of products and own-label will become important, Coupe said.
Social media connecting consumers is a critical factor in that trend.
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