Retailers Need To Move Fast To Capitalize On Retail Media’s Meteoric Rise

The retail industry has well and truly woken up to its potential as a platform for digital advertising. Rarely discussed until just a few years ago, retail media and data monetization now represent a $100 billion growth opportunity globally.

Retailers have access to consumers’ attention on a scale few other industries can match. And that creates huge potential for selling ads, both in store and online, alongside new data services. AmazonAMZN
, for instance, now increasingly rivals the largest global social media giants as the channel of choice for brands’ advertising spend.

But where Amazon leads, other retailers are following fast. While North America has generally been the most active market to date due to its scale advantages, retailers in other parts of the world are also now looking to capture the opportunity.

In Europe, for instance, the retail media market is expected to grow from under €8 billion in 2021 to €25 billion by 2026. And we’ve already seen moves from large grocery brands, such as Sainsbury’s in the UK and Carrefour in France, to build up the digital advertising side of their businesses.

What’s driving such dramatic growth?

Put simply, it’s all about the data. Retailers have been sitting on a goldmine of data about their customers’ needs, wants, desires and behaviors. And because much of it is based on actual transactions, the data is often richer and more granular than that available in other sectors — even including major ad-reliant technology players like social media platforms.

This granularity is exactly what advertisers need to provide targeted, personalized, compelling and relevant content. Not only that, retail media content is reaching customers much closer to the point of purchase. It means retailers can potentially give brands much better feedback, much faster, on the effectiveness of their campaigns.

These capabilities are becoming even more important as the third-party cookie enters its death throes and technology companies completely rethink their approach to user privacy. Delivering targeted advertising campaigns via digital channels is becoming increasingly difficult without access to first-party data, if not impossible.

A win-win-win

Done well, retail media offers something for everyone. Consumers can receive better, more relevant content, offers and promotions at a point in their purchasing journey when they’re more likely to be receptive to the right message — and less likely to be annoyed by intrusive advertising.

Retailers are able to generate new revenue streams, increase profitability, and get more insight into their existing customer base. With the economic outlook remaining uncertain around the world, this can provide a much-needed source of new revenue growth.

And clearly, retail media is a win for brands too, who can provide far more targeted, cost-effective advertising, with more direct ways to measure purchasing uplift, whether online or offline.

What do retailers need to do to capitalize?

Clearly, retail media rests on having the right digital infrastructure and data capabilities. And, historically, these haven’t always been retailers’ strongest suits.

Right now, most are generally taking one of two approaches. The first is to create and run a retail media platform (either on their own or with a partner) to establish a digital and/or in-store advertising network. The second is to focus on building a data insights platform for sharing data, insights, and value with brands and advertisers.

But the real value is to be found in bringing the two approaches together – providing brands with a unified offering comprising both ads and data insights to help them grow their own businesses. To do this, retailers need a modern underlying infrastructure that includes cloud and edge technologies, as well as capabilities like data clean rooms and advanced data management.

The technology is only one side of the equation, however. Because becoming a retail media player at scale requires a new end-to-end strategy for the whole business. It needs new ways of working and access to new kinds of skills that won’t be present in many existing retail businesses – including ad sellers, content producers, media buyers and data analysts to name just a few.

Focus on first-mover advantage

This is a very fertile and fast-moving space. Retailers intent on capitalizing on the opportunity will need to be quick if they want to stake a claim. Early-mover advantage will be especially important as it’s probable that only a small number of players will come to dominate the market.

In practice, many brands and advertisers will want to invest their time and advertising spend with one, perhaps at most two, of these principal players in each region. And already, 92% of advertisers and 74% of agencies say they’re partnering with retailers to reach consumers.

To gain a foothold in this huge growth area, it’s vital retailers move quickly to establish a clear retail media strategy and invest aggressively in establishing the underlying technologies, processes and skills.

Going forward, the retail business model will increasingly come to resemble the media business model. It’s a significant change. And the retailers who get it right first are set to realize the greatest rewards.