Retailers Need to Enable In-Store Retail Media Now or Get Left Behind
Retail media has evolved to position itself as one of the fastest-growing forms of advertising. According to projections from Emarketer, U.S. omnichannel retail media ad spend will reach $129.93 billion in 2028, up from $54.85 billion this year. For context, Emarketer projects once-king U.S. linear TV ad spend will sit under $55 billion by 2027.
Unlike traditional forms of advertising, effective retail media provides brands with the unique measurable opportunity to connect with consumers across their entire path to purchase. However, with more than 200 retail media networks (RMNs) globally and dozens in the U.S., the landscape is increasingly fragmented, leaving brands to grapple with how to effectively allocate their media budgets across retail and commerce media networks.
To win, retailers must differentiate themselves by developing unique value propositions that attract repeat brand investment. But how?
Not everyone can be Amazon — that’s OK
As the retail media landscape continues to shift at a lightning pace, it has become clear that the vast majority of U.S. retailers have so far missed out on a significant opportunity: the chance to enable in-store retail media for brands. In the race to compete with retail media behemoth Amazon, retailers have forgotten about the one asset that sets them apart: their brick-and-mortar store footprints. Walk into the majority of North American brick-and-mortar retail stores in 2024, and you’ll see that in-store advertising doesn’t look all that different than it did two decades ago. We’re overdue for an upgrade.
Despite the surge in e-commerce during the pandemic, around 80% of transactions still occur in-store, according to the National Retail Federation’s State of Retail report. As consumers continue to prefer tactile shopping experiences, retailers have a prime opportunity to influence purchasing decisions and improve the shopper experience in real time through strategically placed, relevant in-store media.
Retailers in North America that want to win must adapt, offer brands the opportunity to meet shoppers at their preferred point of purchase and respond to the growing consumer demand for integrated, engaging and personalized brand experiences within their store walls. Otherwise, retailers and their media networks risk becoming obsolete in the race to win.
In-store retail media offers a unique opportunity to engage consumers during the final, crucial stage of their shopping journey. Consumers come to retail stores with the intent to purchase and are in an ideal position to be influenced, whether in the aisles, around the store or at checkout. In-store media is even more effective when actioned as part of a broader omnichannel strategy that has reached consumers at other points in their shopping journey, whether via CTV, social media platforms or their favorite app. According to data from Plan-Apps, the technology that powers SMG x Threefold’s partner RMNs for retailers like Asda, Walgreens Boots, Co-op and more, brands see a double-digit sales lift when they activate retail media in and around the store.
Furthermore, when retailers invest in digitizing their brick-and-mortar stores, they gain the ability to control content in real-time and tailor messaging based on specific contexts, such as time of day, weather or current events (think a nearby Taylor Swift concert, the Super Bowl or the state fair). By harnessing these capabilities, retailers can maximize the effectiveness of their media networks and provide consumers with relevant messaging and brands with measurable results that illustrate the impact of their investments.
While retailers in North America have in the past year talked a big game about in-store retail media, they’ve, in practice, been slow to make any moves to implement it, some believing they can reach their retail media goals through a digital-only approach. But if retailers want to actually harness the full power – and profitability – of retail media, they must realize it’s not a digital-only play.
Overcoming Perceived Challenges with In-Store Retail Media
While the potential for in-store retail media is vast, myths and outdated beliefs related to the costs associated with activating it have held retailers back from embracing the margin-rich opportunity. Retailers – falsely – believe the only way in is through a massive in-store digital overhaul. While in-store digital transformations are underway across retail, there are numerous ways retailers can activate analog in-store media right now without massive digital transformation; think of aisle end-cap displays, shelf tags or printed vinyls on and around the store. Retail media is not just digital, there are numerous impactful ways to influence consumer behavior without a single in-store screen.
That said, upgrading stores to support digital retail media is a worthwhile investment in the long term, as it enables greater possibilities for retailers and their supplier brands. Retailers can now leverage AI-driven platforms to optimize media placement based on foot traffic, consumer behavior, and inventory levels, allowing for more efficient resource allocation. The digitization of the store can enable retail media across touchpoints – screens, audio, etc. – to be purchased programmatically and activated by a retailer’s media network remotely, ensuring compliance and limiting disruptions to in-store operations. Additionally, establishing dedicated and integrated retail media teams, separate from merchandising or other internal organizations, can help retailers overcome internal silos and effectively coordinate in-store media strategies.
Like all retail media, there are challenges in measuring in-store activations, as evidenced by the IAB’s recent work to bring more standardization to the area. At SMG x Threefold, our networks employ a test vs. control methodology that leverages bespoke matching criteria to allow retailers and brand advertisers to understand the incremental impact on the sales where media was live compared to stores where media was not activated. Our analysis ensures that variables that impact sales are properly accounted for so that our retailer partners and brand advertisers can be certain a sales uplift was actually driven by media. In-store media is measurable if retailers are willing to be transparent with their advertisers to test, learn and grow together.
The Omnichannel Future
Moving forward, the integration of omnichannel, full-funnel marketing will be critical for retailers. Brands expect their advertising to seamlessly connect with online and offline experiences, and retailers must ensure their media offerings are synchronized across channels. Retailers that hesitate to adapt will be left behind, as brands will prioritize long-term partnerships with retailers that can provide cohesive, data-driven marketing solutions on-site, off-site and in-store.
By investing in technology, choosing the right partners to help, treating brands as clients, not suppliers, and embracing the unique and shifting dynamics of the shopper journey, retailers can enhance their value proposition and position themselves as leaders in the evolving retail media landscape. Those who move quickly will seize the opportunity to thrive in this new and truly omnichannel era of retail media.
About the Author
Tara Hekmat is a client director at SMG x Threefold, where she partners with retailers and CPGs to launch and optimize end-to-end retail media strategies, curating omnichannel campaigns that grow sales, build brand loyalty and deliver improved performance. Prior to her role at Threefold, Tara spent 6 years on the Capture team within SMG, collaborating with CPGs to plan, execute and measure their retail media campaigns across top grocers.