Is social media the retailing wave of the future, or will it minimize store visits and decrease basket sizes?

social media, mobile applications, mobile apps, Facebook, Twitter, Motorola Solutions, Geoff Walden, Jeffrey Woldt, digital media, online shopping, mobile phone applications, social networking, tech-savvy shoppers, Frank Riso, Sona Chawla, Walgreens, e-commerce, Pharmaca Integrative Pharmacy, marketing, Laura Coblentz, Shoppers Drug Mart, SDM, Byron Ells, iPhone, iPad, new media, Matt Lowe, retail marketing, McKesson, Android, Blackberry, pharmacies, retail pharmacy, online pharmacy, IBM Institute for Business Value, Melissa Schaefer, ShopSavvy, chain drug retailers, Rob Price, CVS Caremark, John Learish, Rite Aid, Cristy Leon-Rivero, Navarro Discount Pharmacy, Tom McConnell, Discount Drug Mart

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Social media: A game-changer for retailers

March 14th, 2011

NEW YORK – Is social media the retailing wave of the future, or will it minimize store visits and decrease basket sizes?

Whatever the answer is, retailers and suppliers agree that it’s here to stay, and they are dramatically boosting their links with shoppers through Facebook and Twitter as well as through mobile web sites and downloadable mobile applications.

The most telling insight into the digitization of retailing may be merchandisers’ belief that last year’s holiday shoppers knew more about their products than their employees did.

Fifty-five percent of retailers surveyed by Motorola Solutions believe that shoppers were better connected to consumer information than store associates, thanks to online shopping tools and mobile phone applications that enable price comparisons, access to coupons and social networking.

The Motorola survey found that retailers that aren’t investing in technology to stay ahead of increasingly tech-savvy shoppers are hurting their profits. Nearly three in 10 store visits ended with an average of $132 unspent due to abandoned purchases, and the customers who walked out without spending that money may have known of better deals elsewhere or were turned off by a lack of help.

“Retailers have put their associates at a significant disadvantage to connected consumers,” says Frank Riso, senior director of retail solutions at Motorola. “With 87% of surveyed retail associates noting that shoppers can easily find a better deal, offering the best customer experience is more important than ever.”

Sona Chawla, president of e-commerce at Walgreen Co., says Walgreens views social media as “a way to listen, learn and participate.” In essence, the use of Facebook, Twitter and other platforms extends the one-on-one connection in stores to the Internet, she notes.

Considering that there are over 500 million Facebook users, Pharmaca Integrative Pharmacy vice president of marketing and innovation Laura Coblentz describes social media as “a mass market mode of communication” as well as a viable marketing tool.

“It’s much more than an opportunity to do the age-old job of advertising to your audience at large,” she says. “It’s a tool that allows businesses to have a two-way conversation with that audience.”

As a health care company, Pharmaca can leverage social media to empower customers with information about health issues and products.

“We receive immediate feedback from customers about products and promotions they like, or don’t, and they share their perspectives with others,” Coblentz explains. “We use Facebook as a research tool and poll customers about their favorite products, and we ask them about topics they want more information on. Also, it is very powerful to get a recommendation for a supplement or body care product that someone else has used and with which they’ve had a positive experience — personal recommendations mean a lot to the Pharmaca audience.”

Many chains have extended the use of social media into the mobile arena.

Shoppers Drug Mart (SDM) recently launched a mobile app, which has been embraced by the iPhone and iPad world, says Byron Ells, the chain’s marketing director for digital and new media. The SDM everyday app lets people to check prices and products, find nearby stores, create shopping lists and look at relevant offers and coupons, as well as check loyalty program points.

“The one thing we’re all learning about mobile is that once people download it to their phones, there’s a huge opportunity to continue to evolve the different offerings,” Ells notes.

Matt Lowe, vice president of retail marketing for McKesson, says there is substantial evidence that mobile devices are increasingly being employed to manage drug therapies in concert with pharmacies. “The emergence of mobile is really changing the way people interact with retail. Anytime and anywhere, people are accessing their mobile device, whether it’s through their iPhone, Android or Blackberry,” Lowe says.

Consumer Decision Making:
Who Has The Most Influence?

That view is echoed by a report from the IBM Institute for Business Value, which finds that new technologies and socioeconomic trends are converging to empower consumers and alter the way they interact with retailers. The change poses a fundamental challenge that retailers are still struggling with, according to the study, titled “Capitalizing on the Smarter Consumer.”

“Thanks to technology, consumers have been getting smarter and smarter,” the study states. “But have retailers kept up with them? The results of our latest consumer survey suggest not.”

Technology is central to shoppers’ growing intelligence, with various digital media affecting different aspects of the retailer-consumer relationship, according to the report, written by Melissa Schaefer, the IBM institute’s global retail research leader. Shoppers use web sites mainly to obtain information about prices and coupons, in-store kiosks to understand product features, and mobile phones to locate stores.

Shopping has become fragmented, the study adds, with consumers using technology “to weave in and out” of the process instead of browsing at several stores, finding something and buying it in one sequence. What had been “an uninterrupted flow” is becoming “a series of moments” that entail gaining awareness of a product, researching it, buying it and taking possession of it.

At the same time, shopping has become more compressed, with time-starved consumers able to go online for information in minutes rather than spending an hour wandering through a store. And the influences on a purchasing decision are increasingly in their own hands. Rather than responding to ads and promotions, they are using search engines and mobile applications such as ShopSavvy that are outside a retailer’s control.

“The retailer’s window of opportunity for influencing the consumer has therefore become much smaller,” the study says. “It has minutes rather than hours to make a favorable impression.”

As challenging as this transformation is, it holds tremendous potential. Retailers that can listen to, learn about and empower shoppers “will be well positioned to satisfy — and capitalize on — today’s smarter consumer,” Schaefer writes.

Chain drug retailers are recognizing both the challenge and the opportunity that mobile access and social media present. Here's what some other retailers had to say about the changing environment:

"Whether they are engaging in a discussion about flu shots, checking our interactive circular on Facebook or following ExtraCare deals on Twitter, a growing number of our customers are turning to social media to complement their experience in our stores and on Our social media-engaged customers seek information, value and personalization.” — Rob Price, senior vice president and chief marketing officer, CVS Caremark Corp.

“Social media ... give us another channel to reach the customer. There are people that love e-mail, people that love direct mail, people that love to talk on the phone and a growing number of people who prefer social media sites. By having so many options, we can tailor how we talk with each customer to meet their desired mode of communication. ... And it has given us the ability to communicate much quicker.” — John Learish, senior vice president of marketing, Rite Aid Corp.

“Traditionally, we had relied almost exclusively on print media, but through Facebook we’re taking advantage of new ways of advertising, increasing sales and gaining a new audience. We explored other forms of social media but found Facebook a better vehicle for engaging and interacting with our fan base.” — Cristy Leon-Rivero, vice president of marketing, Navarro Discount Pharmacy

“[Social media] provides a direct line of communication with actively participating customers. We believe it can improve customer service and strengthen our brand.” — Tom McConnell, chief financial officer, Discount Drug Mart

*Editor's Note: To read the full six-page special report on social media, please see the March 14, 2011, issue of Chain Drug Review