Reshaping Your Grocery Store with Retail Media Networks

September 1, 2023

If you own a grocery store, you should focus on a phenomenon reshaping the retail industry: retail media networks or RMNs. RMNs are platforms that allow retailers to display ads to their customers while they are shopping online or in-store. This way, they can influence their purchase decisions at the moment of truth, when they are most likely to buy. RMNs are especially powerful in the grocery sector, where customers often make impulse purchases and are open to new products.

The Evolution and Growth of RMNs

RMNs are not a new concept. It started with general e-commerce retailers like Amazon, which leveraged their massive customer data and traffic to create a lucrative advertising business. But soon, other retailers followed suit, including grocery retailers like Kroger, Albertsons, and Tesco in Europe, as well as chains like Target and Walmart. These retailers realized they had a unique advantage over pure-play e-commerce platforms like Etsy or ASOS. Those retailers have online and offline touchpoints with their customers, giving them more opportunities to deliver relevant, personalized ads. But how big is the opportunity for RMNs?

Statista reported that retail media spending in Europe was estimated at under 10 billion euros in 2022. Industry sources project that the spending will experience an explosion of popularity, growing over 25% annually until 2026, with a projected value surpassing 25 billion euros. With 3.42 billion dollars in ad revenue, Amazon dominated the market. However, other European retailers like Zalando, Allegro, and Otto Group were also among the top players in the market.


How Can Grocery Stores Measure the Effectiveness of Their In-Store Digital Ads?

Measuring the effectiveness of in-store digital ads is a challenge for many retailers who want to optimize their marketing strategies and increase their sales. But with Location intelligence, grocery stores can:

  • Track the foot traffic, dwell time, and purchase behavior of customers exposed to their in-store digital ads in different store zones.
  • Measure the incremental sales lift and return on ad spend of their in-store digital ads by comparing the performance of controlled test stores.
  • Link their customers' online and offline behavior registered with their loyalty program. In this way, grocery stores can analyze how their in-store digital ads influence their customers' online shopping frequency, basket size, and product mix.
  • Share their metrics with their brand partners and charge them based on the performance of their ads. 
  • Optimize their ad inventory and pricing.

Why Should Grocery Stores Consider Using RMNs?

Grocery stores face many challenges, such as declining consumer spending, supply chain difficulties, labor costs, overhead costs, and new competition from e-commerce giants and discounters. These challenges have eroded their growth and profitability, risking their survival. To cope with these pressures, grocery stores must find new ways to monetize their online and offline platforms and offer more value to their customers and brand partners.

One of the ways to do this is by using RMNs. These platforms enable grocers to:

  • Increase their revenues from online and offline channels by selling ad space to brands.
  • Create a more engaging and personalized shopping experience for their customers and compete with e-commerce giants like Amazon and Walmart.
  • Build stronger relationships with their brand partners, offering them more visibility and influence over their products.
  • Leverage their data and insights to optimize their marketing strategies and operations.

According to the latest statistics, 74% of brands have dedicated budgets for retail media advertising. In general, after the pandemic, RMNs became more valuable. The same statistics show that brands spend a bigger percentage of their ad budget on retail media every year, reaching almost 15% in 2021, an expected 19% by 2024, and 25% by 2026.

Besides, RMNs are the most preferred digital ad format for 30% of brands, ahead of social media, search, and display. In 2021, digital retail media ad spending worldwide was 77 billion USD. The projected value would increase to $143 billion by 2024.

Why Do Consumers Prefer In-store Digital Ads Over Other Formats?

Consumers may prefer in-store digital ads over other formats for several reasons:

  • In-store digital ads can offer convenience, personalization, and interactivity to consumers. They can help consumers find their desired products, get relevant information and recommendations, and access discounts and rewards. In-store digital ads can also create a more engaging and immersive shopping experience for consumers, especially when combined with other technologies such as augmented reality, voice assistants, and mobile apps.
  • In-store digital ads can also influence consumers’ purchase decisions and loyalty. According to a study by Nielsen, 68% of shoppers said that digital ads in stores would make them more likely to buy the advertised product, and 44% said that they would make them more likely to buy from the retailer in the future. They can also increase consumers’ awareness and trust of brands, as well as their satisfaction and retention.

Consumers are looking for more convenience, health, premium, and sustainability products, and in-store digital ads can offer them high-quality data, targeted audiences, and measurable results.

What Do Retail Grocery Stores Think About It?

Retailers find significant value in the additional revenue stream that RMNs provide. This becomes especially important as concerns mount regarding the effects of inflation and consecutive years of supply chain challenges on the overall profitability of the retail sector. Concurrently, brands recognize the substantial benefits of RMN ads, as they tend to wield a wider influence than other paid media placements. The realm of retail media empowers brands to deliver exceptionally targeted ads using first-party data. These ads are strategically presented precisely at the point of purchase, amplifying their effectiveness and enabling brands to establish deeper connections with their target audiences.

RMNs Expand Across Different Retail Sectors

According to a recent study, in-store retail media offers access to audiences that are, on average, 70% larger than digital audiences. These in-store ads are key to engaging and influencing shoppers while they are actively making purchase decisions.

Romney Allen, senior product owner of onsite advertising at Best Buy Ads, stated: “Over the past couple of years, we’ve seen increased trends linking the digital experience and in-store shopping closer together, such as buy-online-pickup-in-store... Ads within a store environment connect those brands directly to the customer while they shop.

Today, many multi-category retailers, such as Amazon and Walmart, are among the early adopters of multimedia solutions for in-store retail. For example, last October, Amazon allowed companies to use its DSP to broadcast programmatic advertisements on digital store signs. In 2021, Walmart began selling advertising space on checkout counters and point-of-sale screens to reach a larger segment of consumers in stores.

But also in a parallel manner, Kroger, the largest chain of supermarkets in the U.S., struck a deal to bring digital smart screens to cooler aisles in hundreds of its stores, and Target began testing in-store demos and giveaways, including a recent “Barbie” branded event with Mattel that took place at about 200 stores.

Brad Jashinsky, director analyst in the marketing division of research firm Gartner, said, "It's definitely a trend we're hearing more and more about from retailers large and small. About 80 percent of all purchases still take place in stores. So this is a huge number of impressions and a huge opportunity."

Final Thoughts

RMNs are playing an increasingly important role in the retail industry. By integrating with location intelligence, they are changing how we shop and how brands reach us. Grocery stores are recognizing the potential of RMNs to engage shoppers at the moment when they are ready to make in-store and online decisions. The growth of RMNs is impressive, with projections indicating a significant increase in spending and adoption. As these networks continue to evolve, it is clear that RMNs are becoming key players in the retail space.

But what’s next? Could RMNs be the driving force behind a more engaging and personalized shopping experience? Will they further bridge the gap between online and in-store interactions? With RMNs, every shopping trip could feel tailor-made, leading to increased retail engagement.

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