Last year, retail media in the grocery sector began to take off thanks to the adoption of new advertising technology, enhanced customer and CPG data collection, network expansion, and the development of new revenue streams.
Retail media, in its simplest form, refers to advertising to customers in actual retail locations. In general, popular techniques include in-store sampling, loyalty cards, in-store advertising, and coupons or vouchers. For example, a major grocery chain implemented retail media by partnering with a leading food brand to offer in-store sampling of their new product. Customers shopping in the store were able to try the product for free, which not only increased brand awareness but also resulted in immediate sales. Additionally, the grocery chain used their loyalty card program to gather data on customer preferences and shopping habits, allowing them to tailor personalized advertisements and offers through in-store advertising and targeted coupons. This strategy not only boosted customer engagement but also generated increased customer loyalty and repeat purchases. Overall, the grocery chain's combination of in-store sampling, data gathering through loyalty cards, and targeted advertising proved to be a successful strategy for increasing brand awareness, driving immediate sales, and fostering long-term customer engagement.
Consumer communication has become more challenging as a result of tightening consumer privacy standards, which have undermined enduring digital marketing tools like third-party browser cookies. Retail media fills this gap by giving advertisers a compelling new channel to reach consumers after being able to access first-party data from consumers and "close the loop" by identifying those who make a purchase after seeing an advertisement. With its closed-loop advertising and first-party data, the retail industry is in an excellent position to alter the dynamics of the market. Reaching targeted customers in the environments in which they make shopping decisions will require a closed-loop system that includes retail media and in-store marketing as essential components.
The attraction of additional revenue prompted some of the largest grocery store chains, such as Ahold Delhaize and Albertsons, to establish their very own media companies. Even independent grocery stores, such as the Midwest-regional Woodman's Markets, joined in on the action.
eMarketer estimates that retail media spending will surpass $60 billion by 2024, up from more than $40 billion in 2022. In 2023, retail media is projected to have the highest growth rate of any media channel, with global spending increasing by 10.1% to $122 billion.
Retailers need to provide the necessary access because “every CPG brand will have retail media included in their budget in 2023, many for the first time,” according to Jordan Berke, CEO of Tomorrow Retail Consulting. “This is the year everyone, from an advertiser standpoint, jumps into the market. ”Experts predict that as 2023 progresses, retailers will be ready to create more engaging content, build customer loyalty through more targeted advertisements, and take ownership of the data discovered through retail media. In the same vein, retailers and brands do not always see things from the same perspective, and there is still room for development in terms of improving data processing, measuring results, and managing relationships over the long term. Grocers must work hard to meet suppliers' performance and measurement expectations, despite retail media's promising innovations. Grocery stores are able to gain a deeper understanding of the shopping patterns of their customers and provide their suppliers with more accurate information as a result of the data collected from digital advertisements and live in-store events. However, as these retailers begin to establish their own media operations, they run the risk of being inundated with an excessive amount of data to process.
Grocers want to go beyond banner ads and sponsored searches to create more personalized, entertaining experiences that build customer loyalty as retail media grows. Video advertisements that can be shopped, or "shoppable" videos, are increasingly appearing on retailers' own websites and digital platforms to promote their products, services, and specialized departments. For example, a grocery retailer can use shoppable videos on their website to showcase recipes using the products they sell. Customers can watch the video, click on the ingredients they need, and add them to their shopping cart for easy purchase. This not only improves data processing by tracking customer preferences, but also measures results by analyzing which recipes are most popular and driving sales. By continuously creating engaging and personalized content, the grocery retailer can build long-term relationships with customers and enhance their loyalty to the brand.
Another example is that an in-store event that features wine and cheese pairings can sell a lot of high margin products within a few hours to a very specific target audience, in addition to capturing their feedback, contact information, and on-line hashtag reference to this experience for a word-of-mouth marketing ripple effect. People go there with the intent of buying something or converting in some way. That's where the future and full potential of retail media lie. The deployment of tools, like event management software, can dramatically improve retailers capacity to engage consumers and brands at scale.