Let's face it, retailers have always sold media to suppliers. So you could argue the buzz around retail media is overblown. It isn't. What's changed is the inventory, the data and the ability to prove it works.
From cardboard to closed-loop
Retail media used to mean window posters, FSDUs and shelf-edge POS, sold for £X to satisfy joint business plans. There was little reporting and compliance was hit and miss. The supplier's MD would visit a local store only to find the display they'd paid for wasn't there, and then claim a rebate. It was seen as the grubby end of marketing.
Today the inventory ranges from digital screens and branded electronic shelf-edge labels to online banners, sponsored search, store-specific social and personalised CRM. Content can be controlled centrally with precision. The most progressive retailers plug their network into EPOS so brands can see the sales impact of a campaign almost in real time. That's closed-loop measurement, and the CFO will love it.
Why brands love it
Brands can reach shoppers at the moment of decision. Most purchase decisions are made in store, and many at the shelf edge. The customer has decided they need shampoo or headphones, but not necessarily which brand.
- First-party data. Retailers see what customers actually buy, supercharged by loyalty schemes. That beats third-party data now that cookies are going.
- Less wastage. Traditional TV, press and radio reach a lot of people with no interest in the product. Retail media reaches people who are already shopping the category.
- Relevance. Content can change by store, time of day, day of week and even weather, like ice cream in a heatwave or hot drinks in a cold snap.
- Full funnel. Create desire front of store, then reinforce it at the shelf edge. It's a CMO's dream.
Increasingly the buyers aren't just the retailer's trading team but brands' media agencies, unlocking budgets that used to go to traditional channels.
Why it matters for the retailer's P&L
The appeal is simple. Retail media drives incremental income and sales, and suppliers invest rather than the retailer. The impact on EBITDA can be profound. Done well, featured products sell more and the shopping experience improves too.
Build or buy?
Stores are becoming full media channels, and with so many platforms and partners on the market, some retailers will make the wrong choice. The result is a network that fails to deliver the income in the business case.
- Off-the-shelf is faster and easier to launch.
- Building your own backbone allows more customisation, scale and future-proofing, with the best specialist tools plugged in.
Flexibility is key. Supplier demands and technology will keep evolving, and the capital involved is significant, so the architecture needs careful thought.
What to measure
Evaluating retail media is much easier than it used to be. Track the full business benefit, not just the income line:
- Supplier income, including budgets unlocked from traditional media.
- Media metrics such as reach, impressions, open rates and click-through, to show where to double down.
- Sales and margin. I prefer return on margin (ROAM) to ROAS, because margins vary so much by category.
- Brand metrics: awareness, recall and consideration.
- Data income, since suppliers will pay for insight that helps them grow.
- Customer experience. Retail media changes the shopping experience, so check that CSAT and NPS go up, not down.
Where it fits in the marketing team
Retail media touches every stage of the funnel, so it's tricky to know where it sits: brand, trade, shopper or digital. Whatever the structure, it needs a clear owner, a rate card, a selling strategy and an operating model that joins up marketing, trading and the supplier relationship.
Is it right for you?
If you have stores or a website with regular customer traffic, and suppliers who want to reach those customers, you almost certainly have untapped income. The mid-market is still working out how to do this, which is an opportunity for those who move first and get it right.