For retailers that have spent years or decades building up their businesses, stores have been shaped into castles — absolute domains where the retailers are able to control the infrastructure through a complete understanding of what, when and how they sell. Endcaps, wobblers, shelf talkers and other essential tools shaped what we can now consider the dawn of modern retail media, but an overfocus on this comfortable, familiar channel may prove to be an undoing for retailers that can’t look beyond their castle walls to embrace new paradigms in the coming years.
For decades, all the media retail tools inside the store — and some outside, such as parking lot posters or kiosks — were the be-all-end-all of retail media, or what we could now consider “Retail Media 1.0.” The boom of retail media over the last few years has been surrounding a second bucket of tools centered around online shopping. Much more so than in the age of third-party cookies — now well into its twilight — retailers are beginning to really understand digital media and key metrics, resulting in a heap of traffic being directed to their online stores. This has in turn created entirely new revenue and significantly streamlined roads to monetization.
Why is this so important? Beyond the simple value of having more customers, this second revenue stream is also considerably more valuable. With proper utilization of data being considered on both fronts, a store can expect to see 40 cents on the dollar for purely in-store efforts vs. 90 cents on the dollar by utilizing digital assets. This is, of course, highly appealing to retailers compared to how they’ve operated in the past. As a result, this second bucket has a lot of major players that are extremely active in driving results, including Kroger, Albertsons, and Walmart.
There is a third bucket of potential revenue that’s significantly newer — off-site. This bucket includes programmatic advertising; website tracking; what customers are doing on Facebook, TikTok and other social media; and so on. While not as widespread as the earlier buckets, retailers working with the latest technology are beginning to move all of this information into their own walled gardens, creating an incomparably clear picture of individual customers and their habits.
All three of these growing revenue buckets drive sales revenue through controlling the customer journey using targeted advertising. However, none of them individually can scratch the power of weaving all three approaches together. As it stands, traditional media is focused on selling traditionally, while new media is focused on the digital realm. These two aren’t properly interconnected yet — but that day is coming soon.
Industry leaders are — slowly but surely — beginning to move beyond measuring siloed channels to measure the full customer experience by bleeding digital approaches and technologies into formerly traditional spaces. Interactive displays and kiosks, mobile apps for loyalty rewards, in-store Bluetooth promotions, digital signage and other tools from “Retail Media 2.0” are now being layered on top of the proven techniques of old, creating a crystal-clear view of the customer journey and, subsequently, a customer profile ripe for monetization.
Add in social media integration to the above and you have a truly omnichannel approach, which should now be the ultimate goal of any retailer looking to thrive in the upcoming era. The trouble is that many smaller retailers still have yet to properly adjust to e-commerce, despite that being an older and fully established ecosystem. At the smaller end of the spectrum, the skillful targeting and positioning of retail media becomes notably more valuable, so the fact that retailers are only utilizing one channel should be seen as an elephant in the room.
The key to success for smaller retailers in the coming years will be incrementality in their integration — they need to move very steadily into this new space. Moreover, there’s going to be notable pressure to prove this incrementality from brand partners. For example, a store working with Colgate would likely want to be able to demonstrate the incrementality of people switching away from Crest, demonstrating signs of a growing market share.
By 2026, digital media revenue is expected to reach $100 billion — and that’s not even including the in-store offering. By combining past and present to synthesize a future-proof approach, retailers have an opportunity to move well beyond their overly familiar castles and establish wide-reaching kingdoms of retail media rich with newly created revenue streams. Those that want to flourish on the other side of the active retail media boom would do well to start sooner rather than later.
Troy Townsend is the CEO of Zitcha, a retail media platform.
View Original Article
