No one can dispute the fact that the Internet has changed the business world. Only a few short years ago, companies were busy launching Websites. Today, e-commerce is a reality (albeit still a small one in this industry) and the ongoing advance of social media is continuing to affect how retailers operate.

Before Internet access became ubiquitous, one dissatisfied customer could influence his circle of friends. Today, one dissatisfied customer can influence an entire community. It's no wonder that many retailers are scrambling to get onboard with social media. Their goals may vary, from establishing a brand presence, to promotion, to engaging the customer; the list goes on.

That underscores the idea that social media is an emerging world of opportunity that deserves attention. Even if a retailer should decide not to be actively engaged at this time, management should at least be aware of, and follow, the possibilities.

Adoption Rate on the Rise

According to an Internet Use Survey from Statistics Canada, some 80% of Canadians aged 16 and older (or 21.7 million people) used the Internet for personal reasons in 2009. That's up from 73% in 2007. The rates of Internet use increased in every province during this two-year period, with the largest relative increase occurring in New Brunswick, and Newfoundland and Labrador (15% each over 2007 figures). The rates were the highest in British Columbia and Alberta (85%), followed by Ontario at 81%.

Similar adoption rates can be seen on social media networking sites. Facebook, for example, reports that it now has more than 500 million active users worldwide. Half of these users log on in any given day, with the average user having 130 "friends." On average, reports the social networking giant, people spend over 700 billion minutes per month on Facebook.

Jameel Lalji, Innovation & Business Development Consultant, Staples: "Customers expect quicker responses on social media than with other platforms, so make sure you're ready with the right internal structure and processes."

Twitter is another popular social networking tool. The company reports that it now has more than 145 million registered users and is adding approximately 300,000 new users per day.

YouTube reveals that people are watching two billion videos a day on its site and uploading hundreds of thousands of videos daily. In fact, reports YouTube, 24 hours of video is uploaded to YouTube every minute.

Information from Forrester Research's Consumer Technographics 2009 data also demonstrates that Canadian consumers are actively involved on the Internet. The company reports that 57% of Canadian consumers are "joiners" (maintain a profile on a social networking site or visit social networking sites) and 64% are "spectators" (read blogs, listen to podcasts, watch video from other users, read online forums, and read customer ratings/reviews). By comparison, in the U.S., "joiners" account for 51% and "spectators" for 73%.

All of these numbers point to increased Internet use and underline the importance of social media in retail business strategies. According to a 2009 Nielson Global Online Survey of over 25,000 Internet consumers from 50 countries, an impressive 90% of consumers noted that they trust recommendations from people they know, with 70% trusting consumer opinions posted online (the number is 72% for U.S. Internet consumers). The survey also showed that 70% of U.S. Internet consumers trusted brand Websites.

Advice from the Educated

So what does this mean for the Canadian consumer electronics retailer? According to Brent Purves, Partner in Vancouver, BC-based Stir Solutions, a social media consultant company, there are many retailers not taking advantage of social media and as a result, a lot of lost opportunities.

"Nowadays when consumers are enabled to comment on and post reviews about their experiences with brands, for the first time it's not just brands pushing their message to consumers, it's a two-way street," he explains. "People get reviews from trusted sources: their friends."

Purves goes on to describe social media as "an essential tool, especially for consumer electronics retailers."

"Smartphones, tablets, desktop computers: social media is an essential piece of what these devices do," he explains. "Nowadays, everyone is plugged into social media."

According to Purves, the way in which retailers can use social media is expansive and changing every day.

"The big boys of the world, like Dell, use social media well and have built entire revenue streams around their Twitter feeds," comments Purves. "Best Buy and Rogers, for example, offer Twitter feeds focused solely on deals, not corporate information. Targeted Twitter feeds like this are a basic business strategy that I would recommend."

Thierry Hay-Sabourin, Senior Manager of eCommerce, Future Shop Canada: "You can walk into any one of our stores and use your mobile phone to read a blog or ask a question."

Other recommendations from Purves? Retailers can use social media monitoring and publishing tools to help listen to, engage with, and support consumers across multiple social networks. Group buying discounts so that people create a buzz around your product. Facebook ‘Like' buttons allow consumers to give a thumbs-up click of approval for products, Websites, and experiences. Geo-location contests, where the customer has to "check in" or snap a photo beside a product or in your store to get a discount, again generate a buzz in the community. Social-enabled e-mail can provide pictures and details from Twitter, Facebook and LinkedIn about your e-mail newsletter subscribers.

"Everything changes so fast," says Purves. "There's a new tool or new idea being introduced on a monthly basis. For example, we now have the ability for live mobile video chats. We'll soon see retailers integrate these into their existing marketing strategies."

According to Purves, 2010/2011 is the time for retailers to dip their toes into the social media market by budgeting the necessary resources.

"The first step is education," he advises. "You need to learn about the opportunities that exist, and it's not an unwise move to sit with a social media consultant to determine the best landscape for your business."

Canadian Retailers Engaged

According to a recent study from the Retail Council of Canada (RCC), about two-thirds of mid-to-large sized retailers currently use social networks, in particular Facebook and Twitter. Retailers also report leveraging blogs and YouTube to some extent.

"Since social media became a consumer trend, it's been on the mind of the retailers," explains Andrew Siegwart, Vice President of Member Services for the RCC. "It's been big on the radar since about 2007/2008."

Siegwart goes on to say that Facebook and Twitter both topped the list of social media used by Canadian retailers in the study, but that many retailers also use blogs and forums to build their businesses.

"Sixty-eight per cent of respondents said they use some form of social media," he says, adding that the RCC has also been tracking a lot of members who use social media for recruitment purposes. "Recruitment is a large part of social media because retailers are trying to find people who share the same values and have a brand affinity. The same things that make social media good for marketing make it good for recruitment."

In fact, the recent RCC study reports that Canadian retailers are using social media tools to achieve multiple purposes, but mainly for marketing, promotions and generating brand awareness. The report indicates that only half of retailers use social media to drive traffic to their Websites, read reviews or for customer relationship management (CRM).

"Meanwhile, Facebook and Twitter stand as simple, but effective tools for creating dialogue and developing deeper relationships with consumers," states the report. "They also offer immediacy in addressing customers' comments or issues and can often elevate consumers' perceptions of brand if used well."

Siegwart adds that for retailers, being tapped into consumer information is always useful.

"Word-of-mouth existed for decades," he explains. "Something that retailers rely upon in social media is that it provides immediate feedback."

At the same time, the RCC report revealed that many retailers have difficulty in determining the return on investment (ROI) of social media, not to mention that it requires work to maintain. Some 24% of respondents said that social media requires too much work to maintain, and another 38% said that they lacked a knowledgeable person to handle the work.

Make it Mobile

Mobile technology is another potential social media avenue. Although Canada's smartphone penetration is reported to be lower than other countries like the U.S., Sweden Italy and Spain, IDC reports that in 2008, 25.6% of all phones shipped in Canada were smartphones. Worldwide growth in smartphones is expected to more than double to 300 million by 2014.

"We're seeing mobile devices become more and more sophisticated," comments RCC's Siegwart. "They will have a definite impact in the future of how retailers do business."

In fact, Facebook reports that 150 million active users currently access Facebook through their mobile devices. And some 16% of Twitter users now join via a mobile device.

At the same time, the 2009 Nielson Global Online Survey revealed that text ads on mobile phones garnered only a 24% "trust" response, compared to online banner ads (33%), online video ads (37%) and search engine ads (41%).

"The study shows that there is still work to be done to shift advertising revenue from traditional forms of media to the Internet," says Jonathan Carson, President of Online, International, for the Nielsen Company. "The ability to turn this around rests on overhauling the way display advertising is served online so that it becomes a more effective medium for brand advertisers and a more trusted form of advertising in the mind of the consumer."

Stir Solutions' Purves envisions a future where smartphones will play a much larger role in social media than they currently do.

"Social media will soon provide retailers the opportunity to search results, Website content, and even in-store advertising based on a consumer's social media profile or what his or her friends like," he explains. "For example, more and more smartphones now have GPS built in, so event-location or store-location campaigns will become more widely available."

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