Marketing & Ad Campaigns

How Retail Media Is Disrupting the Grocery Game

With digital interactions overtaking nearly every facet of everyday life, transactional-based businesses must pivot their marketing strategies—and fast. Failure to innovate new strategies that align with today’s consumers can only lead to missed opportunities.

When it comes to retail and specifically grocery retail, a new media approach to digital marketing has emerged—and it is accelerating growth in the industry. Despite being in its infancy, retail media is already proving to be a powerful form of advertising set to change the future of online shopping experiences. 

 

What is retail media?

Retail media is a marketing strategy focused on advertising consumer packaged goods to customers at or near the point of purchase/choice. Common examples include in-store and online advertising, customer samples, loyalty programs and promotional coupons.

Retail media channels are now considered essential for promoting goods and services and are being taken more seriously by most traditional media agencies. 

Harnessing the power of this digital advertising strategy requires retailers to set up a retail media network. This advertising platform is driven through a retailer’s website or app, allowing the store and other brands to advertise. 

For example, a customer shopping at CVS online might see a product promoted with a sponsored tag. This ad is not just a product listing—in fact, it’s an ad paid for by a company and placed on CVS’s website or app. The company is seeking to attract customers to their brand while shopping at CVS, much like traditional in-store advertising but in a modern digital format.

 

Why does it work?

Research suggests that media placed at or near the points of choice/purchase can significantly impact purchasing decisions.

The possibility of influencing buying behavior is especially appealing to grocery retail stores. While this may seem like a challenge for brands to be visible through online grocery shopping, digital retail media makes it easier to capture attention. 

David Haase, chief development and revenue officer at CitrusAd, a tech company specializing in cutting-edge retail media solutions, told RETHINK Retail that, at its core, successful retail media is all about timing. 

“Online customers in grocery do not overthink purchases,” Haase revealed. “Top search terms are generic, category-based and there is very little to no brand loyalty. While this may seem like a challenge for brand visibility, digital retail media is making it easier than ever to put the right product, with the right attributes at the right time and right price in front of a customer in a relevant and meaningful manner.” 

According to Haase, CitrusAd’s customers who advertise in top positions on retail media platforms can experience revenue generation with upwards of 60-70% conversation rates.  Retail media, he explained, works so well because shoppers are more receptive to ads when shopping than when they are not engaged in shopping-related activities.  

 

Advantages for retailers 

For grocery stores, the most significant advantage of retail media networks is their ability to create new revenue streams.

Considering profit margins on CGPs have decreased over the past few years, adding this new revenue stream can be a saving grace for many retailers needing to boost profits.

Thanks to the rise of e-commerce, retailers that set up retail media networks are becoming new media royalty, opening up a world of possibilities for how they can generate revenue.  

 

Advantages for consumers

Retail media does not only benefit brands and retailers but customers as well. In the age of information overload, irrelevant ads can frustrate shoppers and decrease a brand’s perceived value.

But relevant ads placed at the point of purchase can help customers make better purchasing decisions and take advantage of discounts, generating an overall better customer experience.

These ads can also serve as a reminder about products shoppers may need or want, which can be incredibly helpful, especially when grocery shopping.

In addition to a better customer experience, retail media helps stabilize costs presenting customers with better prices. Increased ad revenue means retailers and brands have more breathing room on their profit margins and don’t need to be as quick to raise prices. 

 

Advantages for brands

Understanding how to allocate marketing investment is incredibly challenging for brands.

Retail media provides a significant advantage for competitive brands because it provides credible data that ties ad spend to sales.

Sales can be more easily attributed to a specific ad and action because the online sale happens close to the ads.

Understanding the ROI for campaigns provides brands with crucial information to make better strategic decisions for allocating resources and marketing investment.    

 

A platform with options

Through retail media networks, retailers can offer brands a space for ads on many pages of their website or app, including the home page, category page, search page, product detail page.

For retailers, this presents the opportunity to increase the price point of the best ad placements. It also enables brands to tailor their ad spending depending on their strategy for reaching shoppers at various stages of their buying journey.  

 

Challenges in a new space

Despite the success of retail media, there are still challenges to overcome in the space.

The biggest disadvantage of retail media is that it caters to large, well-established retailers presenting an uneven playing field for small, local retailers, especially grocery stores.

Establishing a successful retail media network requires a significant amount of online traffic and an advanced IT infrastructure with the capability to offer and track ad space.

Smaller retailers often lack the requirements currently needed to harness the opportunities of retail media. As consumer-centric media solutions and omnichannel marketing continue to mature in the new age of e-commerce, there is a learning curve that small retailers and brands will need to overcome.    

 

Conclusion

The trend of retail media presents significant opportunities for innovation in the grocery industry. As innovation and technology experience rapid evolution, retail media networks are becoming more scalable, impactful, and more manageable for suppliers and retailers. 

Simply put, the grocery industry is a perfect fit for digital retail media, Haase said.  “And the promise of successful digital advertising offers a world of new revenue for the grocery industry.

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