What is next for the retail media landscape

Retail media networks continue to be top of mind for retailers and each week sees yet another development as grocery retailers look to monetise their online and offline assets. There has been a collective realisation around the FMCG industry that major retailers have more reach than incumbent media owners like national TV stations or newspapers and that communicating to shoppers at the point of purchase, either instore or online, can deliver a much greater return on advertising spend (ROAS) than traditional media endeavours.

In the last few weeks alone, we have heard from Sainsbury’s in the UK that it wants to roll out one of the UK’s largest network of instore digital screens in partnership with ClearChannel. Woolworths in Australia, via its retail media division Cartology, will be deploying gondola-end digital screens in its health & beauty and baby departments in around 400 stores. Tesco, meanwhile, has just launched the latest in its advances in retail media through the introduction of advertising on its scan-as-you-shop handsets in around 250 stores.

It’s worth remembering, though, that retail media can embrace the analogue as well as the digital, and we are seeing something of a renaissance in low-tech retail media such as instore radio, product sampling, branded bays and shrouds for security barriers and car park bollards. All in all, grocery retailers are in a great position to collaborate with brands to influence shopper behaviour ‘from sofa to shelf’, as Tesco puts it.

Online ads, targeted TV ads via streaming and social media content, as well as old-school means like customer magazines, can reach shoppers while they contemplate their shopping trips at home; digital screens and trolley panels can further nudge their thinking before they even enter the store; while further digital screens and traditional POS and promotions can exert a final bit of influence at the fixture. To borrow another phrase from Tesco: ‘Prime. Prompt. Purchase.’

This is opening up a very exciting new avenue for incremental revenue and profitability for the retailers. For brands, the return on investment from retail media networks is understood to outperform traditional media: one assessment from Magic Numbers suggested that the ROAS from retail media stood at 6.6:1, compared to just 3.8:1 for traditional media spend. Another big benefit from brands is that retailers (by using control stores) can provide a highly accurate closed-loop measurement of campaign effectiveness.

An interesting aspect is the importance of the loyalty schemes that underpin many of these emergent retail media empires. Loyalty schemes give retailers a highly detailed picture of individuals’ or households’ buying behaviours and enable them to target retail media campaigns in an incredibly focused way. This fact goes some way to explaining the global explosion of ‘member only pricing’: by limiting promotions to loyalty card holders, many retailers are seeing a massive acceleration in loyalty card participation – granting them a much stronger bedrock of data and insights on which to build their retail media aspirations.

All well and good: retailers are opening up new revenue sources and brands are discovering more effective ways to influence shoppers. But, and there is always a ‘but’, retailers should remember that this sort of transactional loyalty can only get them so far. Consideration should be given to other types of shopper campaigns that can speak to shoppers’ hearts as well their purse strings. ??