Digital marketers in the retail industry have been thrown into a state of flux in recent days with news emerging that regulators in Congress and the Biden Administration are edging closer to a ban or forced sale of the popular social media platform TikTok. House Speaker Kevin McCarthy, R-Calif., said last weekend that lawmakers “will be moving forward” with legislation to address the heightened national security concerns surrounding the app after the social media giant’s CEO faced hours grilling before a congressional panel last week. The move comes amidst growing concerns over the app’s ties to the Chinese government and the potential for data breaches and privacy violations.
TikTok as a Tool
While this may be a win for national security, for many retailers TikTok has become an essential tool for brands looking to connect with a younger generation of customers. TikTok has deep penetration among U.S. consumers with 150 million monthly active users and more than half of TikTok users saying they use the app to research products and where to buy them. The platform’s short-form videos and viral challenges have proven to be a powerful vector for building brand awareness, showcasing new products, communicating promotions, and engaging with Gen Z (and planting seeds with Gen Alpha) consumers who are increasingly resistant to traditional advertising methods.
In the Armageddon scenario in which McCarthy and his fellow lawmakers pull the plug on TikTok, retailers will immediately be forced to scramble and find new ways to build new connections with Gen Z and the even younger Gen Alpha, who are seemingly hardwired to social media for product recommendations, inspiration and purchase.
Of course, the platform has also created a host of new challenges, such as the emergence of the so-called TikTok “deinfluencers” – social media stars that warn against products or alert consumers of brands to avoid.
Nonetheless, there is no denying that TikTok has pushed Facebook and Instagram to the side and now holds center stage among most of the major retailers consumer-focused digital strategies. Retailers like Macy’s, Best Buy, Home Depot, and Target have all embraced TikTok as an essential part of their digital marketing strategies, leveraging the platform’s reach and engagement to connect with a cohort that has otherwise proven highly elusive. Macy’s TikTok page has become a place to not only showcase new fashion lines but also has encouraged followers to create videos of themselves modeling Macy’s clothing and accessories.
Similarly, Best Buy has used the platform to showcase its latest computers, phone and electronics, even ripping a page from The Food Network by showcasing different dishes that can effortlessly whipped up in a kitchen equipped with the latest Best Buy kitchen gadgetry. Home Depot’s TikTok page has created an impressive slate of micro influencers that promote the retailer’s products as part of a battery of “made with loving hands” how-to videos and DIY tutorials that aim to both educate and inspire customers.
Yet among the major big box retailers, Target is likely the retail brand that is likely to suffer the most pain if TikTok were to go away. With nearly 2.5 million followers on the platform, it is clearly going to lose access to a valuable customer base if the platform is turned off by U.S. lawmakers.
Most alarming for these big box brands is that TikTok provides a unique communication line with young consumers who are still forming their lifelong brand loyalties. Target’s investment in TikTok was clearly aimed at capturing the cohort’s attention now with the aim of turning them into loyal customers as they grow older. For example, “Target TikTok Made Me Buy It” has already become a meme among younger consumers who half-jokingly blame the retailer’s TikTok page as having been the culprit for buying items they realized they really don’t need but still enjoy having nonetheless.
Cutting the TikTok Cord
If regulators decide to proceed with plans to ban TikTok in the U.S., these major retailers — and many other consumer-facing brands — will be forced to find new ways to connect with customers, upending billions of dollars in programmed advertising and promotional spend slated for the platform over the next few years. If a forced sale of the app to a U.S.-based social media company like Alphabet, Microsoft, or Meta were to transpire – which given the immense size and popularity of the platform seems far more likely than simply attempting to ban it outright – it’s possible that there would be little if any disruption to any brand’s immediate plans for how they plan to invest in content for the platform.
But in the Armageddon scenario in which McCarthy and his fellow lawmakers pull the plug on TikTok, retailers will immediately be forced to scramble and find new ways to build new connections with Gen Z and the even younger Gen Alpha, who are seemingly hardwired to social media for product recommendations, inspiration and purchase. This could mean having to invest more heavily in platforms like Instagram, Twitter, and YouTube, as well as exploring second-tier social media channels like Twitch and Snapchat. However, one of the drawbacks of these other platforms is that they lack the same level of engagement and reach as TikTok among the youngest cohorts, specifically when it comes to product positioning. Twitch, for example, may be where Best Buy and Target might find a suitable outlet for their electronics given the gaming and tech-focused nature of the app, but it really isn’t a great fit for Macy’s or other fashion-focused retailers.
But all this could also mean there might be opportunities for new platforms to emerge in TikTok’s wake (double entendre intended.) With over 100,000 recent layoffs at Silicon Valley tech companies including Meta, Twitter and others, there are likely quite a few unemployed tech professionals who are looking at Congress’s potential to press delete on TikTok as an opportunity to step in build a homegrown version to fill the void.
Regardless of if, and when Tik Tok changes hands or is banned from the U.S., retailers would be wise to closely follow new social media entrants into the space and get involved early. Either way, the fallout from a potential ban of TikTok poses a serious threat to the retail industry and big box retailers specifically.