If you accept the premise that retailing is a social business, then it would follow that Facebook should be a slam-dunk application for retail companies.

With comScore reporting that the social networking site has 49 million active users in North America and a worldwide audience that has more than quadrupled in the past year, common wisdom suggests that the opportunity to connect with customers on Facebook, share information — maybe even collaborate with shoppers who are passionate about your brand — is powerful.

Target is on Facebook. So are Nordstrom, Sephora and Crate & Barrel. Specialty chains that court younger shoppers — think American Eagle, Victoria’s Secret’s PINK and PacSun — are there, too.

Yet there’s a whole slew of retailers who would be hard pressed to call themselves “fans” of Facebook — or MySpace or Twitter or any of the other emerging social networking sites.

What’s holding them back?
Few quibble with the popularity of the site, yet they raise questions about the business value of Facebook. And though they don’t always come right out and say it, some think of Facebook as the latest online flash in the pan, a social playground for the young — or both. Fear of less-than-flattering feedback is also an underlying factor.

The site’s “fans” have an entirely different view. Being on Facebook — today, at least — is not about bolstering the bottom line; it’s about developing a deeper relationship with customers. It’s easy enough, they maintain, to see whether a potential customer has landed on their websites from Facebook, but it’s really about being a part of the conversation — jumping in when they can offer a valuable suggestion, providing relevant information about promotions or events and building brand awareness.

Paula Rosenblum, managing partner of Miami-based RSR Research, admits she was initially reluctant to embrace Facebook. “Let’s just say it took some persuasive arm-twisting to get me to set up a Facebook profile,” she says. “I thought it was a kids’ thing.” It didn’t take long for her to recognize the business value of networking with colleagues and contemporaries, however.

Would she recommend that a retailer establish a Facebook page? “If they’re looking for a direct money maker, the answer is ‘No.’ If they’re looking to do some brand-building, then it’s ‘Yes,’” Rosenblum says. “And if they want to do a sniff test to find out their customers’ preferences, they should absolutely be on Facebook.”

Sucharita Mulpuru, principal analyst/retail at Cambridge, Mass. based Forrester Research, is more skeptical. “As a brand builder, maybe there’s some value, but retailers need to guard against the notion that everyone’s doing it, so they should, too.”

Choosing not to dip a toe into the social networking waters in this instance is one thing; turning a deaf ear to the power of social networking is another. These tools can profoundly impact how shoppers interact with retailers — and it’s the shoppers now approaching their prime spending years who are most likely to have been smitten by them.

Social networking sites are proliferating. Some of the best known include MySpace, Friendster, Hi5, LinkedIn and Disney’s Club Penguin, but with about 90 million members, Facebook leads the pack. Founded by Mark Zuckerberg in 2004 when he was a Harvard sophomore, Facebook’s origins are rooted in U.S. universities.

Its popularity quickly spread to high school students, and later the company opened the dorm room doors to an even broader audience (the fastest-growing user demographic is 25 and older).

In May 2007, Facebook announced an initiative called Facebook Platform. Essentially, it invited third-party software makers to create programs for Facebook and share in the profits. Hundreds of “social applications” have debuted, from games like Wordscraper to music and photo sharing tools. Last fall, Microsoft outbid Google to gain a $240 million stake in Facebook.

Growth has continued at a steady pace, with numerous businesses exploring the value of Facebook. Still, as is often the case when it comes to emerging technologies, many retail companies choose to observe rather than engage.

In May, Princeton, N.J.-based interactive marketing agency Rosetta reported that only 30 percent of the top 100 online retailers they surveyed had launched a “fan” page. (For Facebook neophytes, a fan page is a free profile that a company can set up and maintain. Users can declare themselves a “fan” of the company.) In the interim, J.Crew, QVC, Home Depot, Kohl’s and Best Buy have launched fan pages.

Adam Cohen, a partner in the consumer product and retail practice at Rosetta, believes that Facebook’s low barrier to entry has helped jump-start interest. “Anyone can set up a page and create a free profile,” he says. “Facebook is a gold mine for marketers: the platform has an average of 200 data points on each user. It’s a great way to get to know your customers better and to gain a better understanding of what’s important to them.”

Cohen cautions against what he calls forced messaging, however. “Your brand is being talked about so it makes sense to monitor the conversation and to engage in it when it’s appropriate. But this is about social networking, not shopping, and retailers need to respect that.”

Several retailers use their pages to invite fans to opt in to receive information or updates. “If they sign up, it’s a marketer’s dream,” Cohen says. “They’re allowing you to contact them.”

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