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May 17, 2024
Do All Retailers Need In-Store Media Networks to Remain Viable?
In the bustling landscape of retail technology, one trend stands out: the burgeoning realm of in-store media networks. While not a new concept, its current surge in attention mirrors the fervor surrounding artificial intelligence.
As the retail landscape evolves, industry experts foresee a significant move of retail media into physical stores. Nick Larkins, the co-founder of in-store media company Qsic, highlighted the growing importance of proximity to the point of purchase, driving innovation in in-store tech.
“That’s why it feels like the entire industry is laser-focused on innovating and advancing the tech related to in-store touchpoints right now,” Larkins explained. “People on all sides of the business know it’s becoming paramount to engage consumers at this critical point in the path to purchase, whether that’s through video, audio or a mix of channels. Even non-endemic brands are seeing this value.”
With the deployment of interactive screens and personalized mobile notifications, retailers are enhancing the shopping experience, making each visit feel unique and special. This shift toward personalized engagement offers a compelling alternative to the impersonal nature of online shopping.
Looking ahead, Artem Lavrinovich, chief data and product officer of Cooler Screens, emphasized the integration of AI and data analytics as the future of retail media. “This integration will continue to develop, enabling more dynamic and context-sensitive advertising that resonates more effectively with consumers,” Lavrinovich said.
At recent exhibitions like the Retail Technology Show 2024, the spotlight fell on the accessibility of retail media solutions. Of particular intrigue were the cost-effective options that most retailers could implement, notably digital shelf edge advertising. One company reported that its clients’ sales increased by 30% to 80% in the U.S. through the adoption of simple digital shelf edge displays.
What sets these solutions apart is their adaptability. The ability to swap surrounding branding elements allows stores to tailor promotions dynamically, fostering customer engagement. QR codes augment this interaction, linking shoppers to supplementary information, tips, or recipes.
Additionally, lift-and-learn specialist Xtag Retail showcased how digital shelf edge displays can integrate seamlessly with lift-and-learn installations. This synchronization ensures that when customers interact with a product, the surrounding screen content adjusts accordingly. Such synergy not only optimizes existing in-store infrastructure but also enhances the overall customer experience.
At IAB NewFronts, T-Mobile Advertising Solutions unveiled plans for a retail media network across its 11,000+ stores, adding 20,000 screens to reach 240 million consumers. Leveraging anonymized data, T-Mobile aims for precise targeting through its T Life app and in-store displays. Partnering with Plex, the streaming platform, promises personalized ad experiences. This expansion reflects T-Mobile’s commitment to tailored advertising in an era of heightened relevance.
Here are some of the other major retailers currently taking advantage of retail media:
- Albertsons: Albertsons Media Collective collaborates with commerce media platform Criteo to enhance in-store retail media offerings. Leveraging first-party data and shopper information, Albertsons aims for precise ad targeting.
- Best Buy: Best Buy has partnered with CNET to integrate the publication’s content across its platforms, offering advertisers shared ad spaces and access to a combined audience of 50 million monthly visitors.
- Home Depot: Home Depot has rebranded its ad operation as Orange Apron Media, offering ad space on its website and in-store displays. With plans to double its number of supplier advertisers, Home Depot aims to capitalize on its vast customer base.
- Instacart: Instacart collaborates with Google Shopping, enhancing audience signals for advertisers’ campaigns. Additionally, Instacart introduced AI-powered smart carts for personalized recommendations through advertisements.
- Lowe’s: Lowe’s has partnered with Google on a retail media solution, extending advertisers’ reach to third-party channels. Through self-service capabilities and privacy-centric data sharing, Lowe’s aims to enhance ad targeting.
- Macy’s: Macy’s Media Network, overseen by Michael Krans, collaborates with advertisers across Macy’s and Bloomingdale’s to drive discovery and brand awareness among customers.
- Saks: Saks launched Saks Media Network, offering luxury brands sponsored product ads and display banners to increase revenue. Leveraging its rich first-party customer data, Saks strengthens its relationship with brands.
- Walmart: Walmart Connect has introduced various updates this year, including greater display access, media partnerships, and self-service capabilities. With a focus on growth and improved ad targeting, Walmart aims to elevate its advertising business.
Surprisingly, even banks are venturing into the realm of retail media. JPMorgan Chase is one such example, and it is leveraging its vast consumer reach and first-party data to do so. Chase Media Solutions, JPMorgan Chase’s latest venture, aims to offer personalized ads to its 80 million customers, tapping into the lucrative world of targeted advertising.
This move follows a trend where various industries, including rideshare companies like Uber, hospitality chains like Marriott, and fintech startups like Klarna, have embraced retail media as a means of enhancing customer engagement.
Chase’s strategy is driven by the potential of its first-party data and the demand for targeted advertising channels in the wake of changes to user tracking policies by tech giants like Apple. Through partnerships with brands like Air Canada and Solo Stove, Chase has piloted its program, reporting increased sales and customer growth.
The rise of retail media signifies a broader trend in advertising, with companies like Walmart and Amazon capitalizing on their first-party data to build robust advertising platforms. As Google phases out third-party cookies, the demand for retail media networks is expected to surge.
Discussion Questions
What implications does the surge of in-store media networks hold for the future of retail, especially with the resurgence of in-store shopping experiences?
What novel advancements in retail media networks are poised to redefine the in-store shopping experience, particularly in terms of personalized engagement and dynamic advertising?
As retail giants like Walmart and Amazon leverage first-party data to bolster their advertising platforms, how might smaller players like Albertsons and Home Depot differentiate their retail media offerings to remain competitive?
Poll
Loading …BrainTrust
Brandon Rael
Strategy & Operations Transformation Leader
Trevor Sumner
Head of AI and Innovation, Raydiant
Albert Thompson
Director, Brand Strategy (President), Transient Identiti
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Retail media networks are a massive growth area, partly because retailers are leaning into it heavily in order to augment their revenue and profit from the mainstream part of the business. Companies wishing to advertise are also enticed because it has become significantly more difficult to reach consumers through conventional channels like television, and much more expensive to promote via social media. One critical consideration, however, is how this plays with the customer. Reasonable levels of promotion and advertising in store are acceptable. However, overkill – with marketing left, right and center – is going to make for a pretty annoying experience. Balance and customer centricity are key.
And I have to say, Cooler Screens is an example of how not to do it: putting digital ad-enabled screens on fridges is one of the most annoying ideas ever – which is why Walgreens removed them all!
In-Store Media is off and running, and retailers are boosting margins, and brands are influencing consumers right at the point of purchase. Is there anything better than that? The list would be very short. There are also excellent data opportunities but that’s a topic for different day.
There are a variety of retail media formats, some of which are better than others. PharmaVision is another company that wasn’t mentioned. Based on my experience with this program and its operators, specifically at Kroger, I’m impressed with how it helps small brands enter brick-and-mortar stores with new products. This is ideal for new distribution, exposure in the best spots in the largest supermarket in America, and it serves as a test for the retailer to anticipate sales when the item moves to the category aisle, if buyers decide to permanently ad it after three months in the PharmaVision program.
Atop the displays are ad agency-quality videos showcasing the new brands that are displayed right in front of 2000 Kroger pharmacies. The video is being viewed by a captive audience at the pharmacy. Having worked for Jekyll-Hyde Labs for twenty years, I think they’re the best of the best for new consumer packaged goods companies. As a full partner of PharmaVision, the agency creates, develops, and produces the ads internally, with professional studio quality, often resulting in good results for the brand.
In the event that Walmart acquires Vizeo and launches a streaming service to go with it, Walmart Connect could become the most interesting of all. Brands could advertise on the platform, Walmart could generate more revenue, and the data collected could be used in a variety of ways. As of right now, I don’t know how that discussion is progressing.
Retail media, or in-store media, is still in its infancy stage. I think the evolution will bring a lot of testing, new trials, adjustments, changes, and new varieties of partnerships, before it matures. – Db
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Absotively! Without one any retailer in America, regardless of who they are or what they sell, will be doomed…within month, weeks…maybe days! Hey this satirical stuff is fun. But back here on Planet Earth: no…this too shall pass. They have their place, but let’s roll up a few more hours (to find out all the likely downsides) before going apolectic. I tend not to put a lot of faith in articles where the chief witness is the salesperson for the product.
Retail media like in-store audio, digital screens and product samples make the future of stores even more multisensory, informative and captivating. In-store advertising helps brands get closer to customers as they shop, shrinking the distance between product discovery and purchase.
Smart carts and in-store kiosks can maximize personalization, especially if retailers integrate loyalty data. Knowing a customer’s clothing size or dietary requirements would make dynamic advertising and product recommendations more relevant and appealing.
While in-store media are addressing an audience already in the store, the quality of their offerings has the potential to draw repeat shoppers. There is a world of opportunity to exploit, between product information, price promotions, brand introductions and much more — mostly with the financial participation of the vendors involved. This sort of technology takes the concept of endcaps, shelf talkers and other old-school techniques to a completely different level — especially with younger shoppers attuned to visual “noise.”
Proximity and Supply Chain are the two things that come to mind when assessing the value of retail media networks. RMN’s are mapped on top of supply chain in a sense that they serve as an overlay for point of sale. The math is pretty easy = buy media through the retail outlets where the inventory sits for purchase. Proximity speaks to the fact that RMN’s can serve as the “last mile” between consumer and their shopping cart whether the exposure is digital (online shopping cart) or in-store (the one we push around). A brand’s pursuit is to garner consumer attention at the lowest parts of the funnel, to drive share of wallet.
Great point about proximity to the product you’re trying to sell. Another old-school parallel: Make sure that the outfitted mannequin is next to the same featured apparel.
Absolutely. I think everyone remembers the Muzak audio systems for eons ago as the marketing tool to advertise deals, private label, new items. This has progressed to current day digital media, more vendor partnerships, and ways to use and earn marketing funds. It makes sense to have all this in house to better control the narrative and direction of what your focus wants to be.
There is no debating that AI is the hottest trend in retail technology, but retail media networks is another hot trend. It is a great way for retailers to boost in-store revenues and garner incremental revenues from CPG companies. As others have stated, there is a right way and a wrong way to approach retail media networks. Overwhelming shoppers with huge signs or signs that block the actual products (digital cooler signs) may actually annoy them instead of inspire purchases. Digital shelf signs with promotional offers and a QR code for more product information seem like a good approach. And if loyal consumers opt-in for tracking their location in your store, you can personalize the offers based on their preferences and purchase history.
From the initial deployment of digital displays, the concept of in-store digital media networks has not evolved on many fronts. The paid advertising is an income revenue stream for retailers. Story telling by retailers enhances the customer experience and, together with tools such as digital shel-edge displays, can and will increase revenues. As BrainTruster Neil Saunders accurately notes, don’t overdo it by bombarding the customer with too much stimulus; there will be pushback.
Retail media networks are yet another engagement capability between retailers, their vendor partners, and, ultimately, customers. With the continued evolution of how we consume content, from traditional formats such as cable TV and newspapers/magazines, advertisers have had to adjust their strategies to meet consumers where they are. Considering the hybrid nature of how consumers shop and engage, the mix of in-store media, digital content, and personalized promotions is the future of engagement.
Successful retailers are building Retail Media Networks not only as a channel for brand promotion and vendor partnerships but also as a valuable tool for a better understanding of their customers. Considering these emerging trends and statistics, it’s clear that the future of retail media networks as a viable revenue stream is going to be a sustainable model and driving personalized customer experiences:
I actually view RMN’s as a component of long term customer loyalty. Loyalty…as in making the retailer a go-to-first destination. Loyalty…because that retailer has upped their game in providing substantive answers to customers with questions . Loyalty…because the retailer’s media network is informative vs harassing. Retailers need to be careful that in their zeal to jump on the RMN bandwagon they are adding quality and substance to the shopping experience, not annoying distractions. (But…but…the advertising income…!!!)
Some of this conversation sounds like short term market share or share of basket chatter. One clients’ sales increased by 30% to 80% because they adopted digital shelf edge displays…??? Was that growth for the retailer or growth for one brand at the expense of another?
Customers have finite bandwidth in both attention span and their wallet. And RMN’s absolutely have the opportunity to provide distinction and differentiation to the shopping experience. But as usual, it’s going to be all about the quality of retailer-specific implementation. If it’s just more screens showing me more ads, then the money will have been wasted on my eyeballs.
I am late to this party and other BrainTrusters have covered things that I would’ve said. But to answer the question in the headline, “Do All Retailers Need In-Store Media Networks to Remain Viable?” my answer is no. There are plenty of stores that will continue to thrive without electronic price tags or video screens or whatever else retail media network refers to.
I actually view RMN’s as a component of long term customer loyalty. Loyalty…as in making the retailer a go-to-first destination. Loyalty…because that retailer has upped their game in providing substantive answers to customers with questions . Loyalty…because the retailer’s media network is informative vs harassing. Retailers need to be careful that in their zeal to jump on the RMN bandwagon they are adding quality and substance to the shopping experience, not annoying distractions. (But…but…the advertising income…!!!)
Some of this conversation sounds like short term market share or share of basket chatter. One clients’ sales increased by 30% to 80% because they adopted digital shelf edge displays…??? Was that growth for the retailer or growth for one brand at the expense of another?
Customers have finite bandwidth in both attention span and their wallet. And RMN’s absolutely have the opportunity to provide distinction and differentiation to the shopping experience. But as usual, it’s going to be all about the quality of retailer-specific implementation. If it’s just more screens showing me more ads then the money will have been wasted on my eyeballs.
This discussion reminds me of the early days of loyalty cards. Good operators used data captured from their card programs to customize offers to the benefit of shoppers, brands and the retailer. Many others offered a card just to comply and get access to loyalty marketing dollars.
Similarly there will be strong and weak retail media network offerings. This is already becoming apparent. I’d bet those retailers who have experience with effective use of shopper data, their suppliers and shoppers will benefit most. For many others it will just be more in store noise.
Note too that this is early days. The available ad options are expanding. Some very interesting capabilities with high shopper engagement and tracking are in in forthcoming.
Retail media networks are great for the bottom line, not as helpful for shoppers who find digital screen promotion an annoyance. In many stores media and video promo placement are often general noise on the shopping journey as opposed to being thoughtfully crafted as a customer-centric solution.
The opportunity to make digital retail media promotion useful for the customer lies in solving a key issue. It must save time, improve their experience, or result in a better outcome at home. If a customer is grocery shopping for dinner, then media placement with solutions and meal planning options near meats, marinades/dressings and spices is the perfect spot. Adding AI, linking loyalty and providing a $ deal will make it dynamic, actionable.
An 80% margin RMN business can subsidize lower prices, better experiences, and the investment into more customer data capabilities, which will unlock long-term competitive advantage. So no, you don’t NEED a RMN to be competitive, just like Trader Joe’s doesn’t NEED eCommerce. But those who adopt these technologies and apply them at scale will have unfair business and technology advantages.
One challenge you rightly identify is that it has been harder for smaller networks to compete, when brands are supporting 4-6 RMNs, and Amazon and Walmart are taking the first 2 spots. The market drumbeat points to solving the attribution and incremental lift measurement challenges as well as providing greater data visibility into the store. Data and audience are the new currency of differentiation.
The “retail media or die” proposition is an interesting one for some retailers who feel great pressure to gain a share of the high-margin “alternative revenues” presently being captured by the likes of Walmart, Kroger, Albertsons and Target. Other FMCGs don’t like the competitive math that this implies – namely that owners of big RMNs could use the extra profits to lower consumer prices and gain market share.
CPG brands generally possess the bandwidth to negotiate retail media programs with only 6 – 8 of the largest RMNs, which excludes most “power regional” retail partners from practical consideration. This means brands do not yet have a practical way to distribute retail media messages over a footprint that is congruent with their product distribution (or ACV). It also puts some of the finest supermarket companies we have in potential financial peril.
One work-around for this problem could be the strengthening of third-party in-store media networks, which could present a collective audience across multiple retail markets at a scale that might compare with the largest national chains. The cursory audience arithmetic might look good for this – hundreds of millions of shopper visits per week could be a compelling draw for national brands. Of course, participating retailers would require an appropriate share of the revenues.
In-store views may not deliver the valuable first-party data visibility on their own, but a platform that offers the right kind (anonymized) of integration with those retailer’s frequent shopper programs, could allow brands to build well-targeted audiences and track the results of their investments. The retailers would gain a share of the media spend revenues as well as any boost in product sales generated by the campaigns.
For many other retailers, hospitality, transit hubs, and consumer banking operators – and retail-adjacent businesses like Instacart and Uber Eats – the glowing promise of alternative revenue is impossible to ignore. Collectively all these efforts are testing the tolerance of consumers, who are already bombarded with promotional messages hundreds of times a day.
Retailers will leverage their store assets over those of online traffic- why? Because they have more of it that translates into sales. Most stores have far more foot traffic and they are unable to compete in terms of orders of magnitude when it comes to social media or Amazon. Therefore, they must apply RMNs where they can and in a way that is attractive to advertisers trying to drive bottom of the funnel performance- at the point of sale.
Walmarts 170,000 screens in their electronics dept are an example of retail media success in the physical store. Expect most retailers going on the retail media path to explore ways to expand their in-store digital signage and at the same time build it into existing trade agreements with endemic suppliers.
Retail media margins are so large compared to online sales, they help subsidize and justify costs for ecommerce, but in the store it will depend on the product sets and the assurance that other revenue streams are not impacted.
We’ll see more in the way of retail media as it becomes a staple consideration for the entire retail industry.
Stop! Enough already. Don’t we have enough screens in our life? Do I really have to suffer through “the word of the day” when I am filling up my car with gas? Be hounded with a “how to” video while I look for the right light bulb?