The profile of the modern consumer is rapidly evolving and eCommerce sales continue to grow in double digits. It is increasingly on social networks that consumers build their preferences of a given product or service; it is on social networks that consumers gather the necessary information to make purchasing decisions; and it is on social networks that brand awareness is established and brand image is ultimately built.

For the first time ever Facebook was cash flow positive in a quarter (as reported in September 2009), fuelled by advertisement revenues, of which 74% have been generated by local small and medium businesses. From the global retailer perspective, this signifies stronger competitive threats from local, generally niche competitors, who may now have established a stronger image and influence on the social net-worker demographic (which does not include teenagers only, for example the average age of Facebook users is 33).

The top 10 social networks have now reached over 1.3 billion members – while many of those accounts will be overlapping, the number is staggering. Interestingly, the innovative nature of social networking can turn overlapping account profiles into a great opportunity for the retailer to adopt what we call the AISS (Attract, Influence, Service & Support) approach on the same shopper.

In our Worldwide Retail Industry 2010 Top 10 Predictions (Doc #GRI221481 / Jan 2010) we pointed out that retailers' focus now shifts to "same consumer" sales. Expansion will come from attracting customers not familiar with the brand or not in proximity to the stores to the secondary channels (catalog, Web, mobile). Attracting a more frugal, informed shopper to all of the brand's channels, sometimes even simultaneously (the omni-channel shopper), will define the new retail leaders.

Retailers presence in the field of social networking needs to be well balanced, allowing the consumers to decide the retailers' level of access to their own personal spheres. Instead of using the social network as a mere new advertisement channel, the brand should become a “friend among others". For example, Target opened a group that was fully interactive and asked users to actively participate in its activities. It toned down the marketing message and treated users as equals. It was an immediate success, with group members opening discussion threads and posting mostly positive comments. Target's brand image was improved as a result.

Social networks usage is massively growing while on the move, thanks to smart phones and the widespread availability of 3G - a process that can bridge the gap between online and physical shopping. One interesting example of extending social network reach is location based mobile social networking. These applications, oriented to both smartphone and pc users, can match online consumers also with offline retail stores based on proximity and interest. In other words, making geo-marketing an actionable reality for you and your customers.

While current social networks might fade away or be replaced by others, the fundamental social elements that lead to their creation will remain. Ultimately, IDC Retail Insights sees an open social network where all content can be shared effortlessly, crossing different media and channels as if they were one and the same.

This vision would lead to a sort of personalized “web portal” available to each consumer individually, independent of each retailer and yet supported by all of them, accessible from everywhere via a wide array of technologies – widgets, smart phones, traditional PCs, in-store self service stations, and more.

If the widget is the correct passport to this “personalized portal”, allowing consumers to access a social pool where they can share interests, emotions with other shoppers, and where retailers dialogue about products and services, a very relevant question is:

who will be the host of the “personalized portal”? Retailers could find in names as Google (think at Google Friend Connect as a live early example), Microsoft, Ebay, Facebook but also traditional IT players and new entrants.

Watch out for our upcoming report titled 'Social Shopping Networks: Opportunities, Strategies & Risks for Retailers Globally', where we extend this discussion, provide several real-life examples, lessons learned and our advise to retailers to make their social network journey a success.