Facebook launched its Deals service in the UK today, giving retailers the chance to aim offers at consumers based on their location.

By allowing Facebook to share their location on a smartphone, users will be able to see a list of stores nearby with offers on. They can then “check in” at these stores to receive offers and vouchers. Retailers already signed up include H&M, Argos, Benetton and O2.

Some have compared the service to social shopping site Groupon but it’s more similar to FourSquare, which already allows people to check into certain places and receive offers. Steve Thomas, CTO at BT Expedite, calls it “another nail in the coffin of FourSquare” – many retailers have a strong presence on Facebook already and are more likely to use its service.

The announcement puts us one step closer to using smartphones as loyalty cards. Thomas says it means retailers can track customers who enter their stores, and link them to individual transactions if a phone is used to present a voucher or pay.

It’s also a significant step for Facebook, moving it into the bricks and mortar world of retailing and perhaps pushing it closer to its ambition of being the first source of identification for consumers. If more retailers follow Asos and open up transactional Facebook shops, and if Deals takes off in a meaningful way, the role of the site in retail will be integral across all channels. There is even an international element with Deals being launched in France, Italy, Germany and Spain today and across all of Europe eventually. It is already available in the US.

Thomas warns a level of transparency is necessary to avoid a privacy backlash, advising Facebook to provide an application that allows consumers to see the information held on them. There should be a visible account showing where they’ve checked in, what they’ve bought and why they’re being recommended products – many customers will be resistant to any benefits if they feel manipulated.

Argos and Benetton are testing the waters with charity offers, with £1 going to the Teenage Cancer Trust for the first 10,000 people to check in at Argos. Retailers are wary of making consumers feel like their privacy has been impinged upon – Facebook needs to make sure users feel comfortable before the benefits can be realised.

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