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Retail media is transforming the customer experience landscape, with experts predicting a 134% increase in the use of retail media channels by 2028. The US market alone expected to reach a whopping $100B by 2026. As the landscape changes, so do the relationships that underpin it — not least the relationship between retailers and suppliers. For both parties, the need to enhance and diversify their digital presence and improve shopper engagement is leading to a deeper exploration of, and investment in, retail media. That said, as with all rapid changes, we’re seeing firsthand that challenges are emerging.
But First — What is Retail Media and Why Does it Matter?
Retail media is a set of digital platforms owned and operated by retailers to promote products and engage with customers. This includes advertising on retailer websites, mobile apps, retailer-branded newsletters and magazines, in-store advertising, and other digital channels.
As shoppers’ expectations of both physical and digital brand experiences have risen and traditional media struggles to find ways of engaging modern audiences, retailers are increasingly leveraging retail media to create new revenue streams and enhance the customer experience. This approach gives retailers greater agency over how they interact with shoppers, which in turn increases the opportunities for suppliers to influence shoppers at the point of purchase — and ultimately drive sales and brand loyalty.
What Are the Challenges With Retail Media?
Currently, retail media presents more challenges for suppliers than retailers. Retail media provides retailers with a greater connection to their consumers by enabling them to focus on the effectiveness of retail media networks. This excitement is clear when we see that 28% of CPG brands are forming a dedicated team solely tasked with maximizing their retail media ecosystem.
On the other hand, suppliers are concerned about the high costs, lack of transparency, limited usable metrics, and insufficient return on investment (ROI) — with only 23% of retailers sharing real-time campaign data. The gap between retailer excitement and supplier hesitancy is causing strain in many supplier–retailer relationships and therefore limiting the effectiveness of these platforms.
The Importance of Data and Technology in Retail Media
One way to bridge the gap between the sentiments of suppliers and retailers is to ensure that retail media offerings are leveraging the latest data and technology tools. Advanced analytics and artificial intelligence (AI) can help retailers and suppliers gain deeper insights into consumer behaviour and preferences. By leveraging these technologies, companies can create more targeted and personalized marketing campaigns and enhance the effectiveness of their retail media efforts.
Additionally, data-driven approaches can help in measuring the ROI of retail media initiatives, providing a clearer picture of their impact on sales and customer engagement. By increasing both the effectiveness of retail media and transparency of reporting, suppliers and retailers will be better placed to support each other in creating a customer experience that drives spending.
The Future of Retail Media for Suppliers (and Retailers)
Retail media will continue to shape the supplier-retailer relationship over the next decade. In the long term retail media has the potential to become the dominant consumer channel — with China as a potential model where over 49% of all ad spending already goes to retail media. As digital transformation continues to reshape the retail industry, both suppliers and retailers will need to adapt to new ways of engaging with consumers – and they will need to do it together.
For forward-facing retailers, retail media will need to become an integral part of tomorrow’s strategy — if it isn’t already a critical component today. For those suppliers looking to keep pace, they will need to review their organizational structure to find ways to support the growth of this function within their partners’ organizations.
Seizing the Opportunity of Retail Media, Together
Retail media is already transforming the supplier-retailer relationship. While there are challenges to overcome, there are huge opportunities for partners who invest today to lead together tomorrow.
Seizing this opportunity requires a deep-rooted understanding between suppliers and retailers; it requires listening closely and designing systems that work together. Through Advantage Report, we are supporting suppliers and retailers to do just that. By surveying suppliers about their perception of ROI on their retail partners’ retail media and surveying retailers on their supply partners’ use of retail media channels, we’re able to pinpoint opportunities for the two sides to collaborate. Armed with a shared understanding, retailers and suppliers can shape how retail media ecosystems are designed and ultimately achieve their shared goals.
At a time when retail media is growing rapidly, it will be the partners who work most effectively who will seize the opportunity and deliver unforgettable customer experiences.
Advantage Report is a key pathway for trusted feedback and better engagement with your business partners. Get in touch with an Engagement Advisor to learn more.
