The Rise of Retail Media Networks: Opportunities and Lessons Learned

Retail media refers to using digital and physical advertising within retail environments to engage shoppers and drive sales. This includes in-store digital signage and online ads targeting shoppers based on their purchasing behaviour. Retailers are able to leverage rich customer data to deliver personalized and contextually relevant advertisements, enhancing the shopping experience while importantly for them create new revenue streams.

Rapid Growth in the US

Retail media networks have seen explosive growth in the US, driven by the significant shift towards e-commerce and the need for retailers to find new revenue streams. Companies like Amazon, Walmart, and Target have developed sophisticated retail media networks that leverage their vast customer data to offer targeted advertising opportunities. The ability to provide highly personalised ads at the point of purchase has attracted substantial investment from brands looking to maximize their marketing ROI.

Market Development in the UK

In the UK, retail media networks are also gaining traction, albeit at a slightly slower pace. Leading retailers such as Tesco and Sainsbury's have made significant strides in developing their own retail media platforms. These initiatives aim to replicate the success seen in the US by utilising the wealth of customer data available through loyalty programs and in-store behaviours.

Growth Potential of Retail Media

The retail media market is poised for substantial growth. According to industry forecasts, the global retail media market is expected to reach $100 billion by 2026. In the UK, this growth is driven by the increasing adoption of digital technologies in physical stores and the ongoing need for retailers to diversify their revenue streams.

Impact on Bricks-and-Mortar Stores

Retail media networks offer a lifeline for bricks-and-mortar stores, providing new revenue opportunities through in-store advertising. However, the success of these networks hinges on the seamless integration of digital and physical elements. Effective retail media strategies can transform the in-store experience, making it more engaging and interactive for customers.

Examples in the UK: Grocery retailers Sainsbury's and Tesco

Sainsbury’s Retail Media Network

Digital Expansion:

Sainsbury's, in partnership with Nectar360 and Clear Channel UK, has significantly expanded its digital screen network. The initiative, known as "Sainsbury's Live," involves increasing the number of digital screens in their stores from 320 to over 800. These screens are strategically placed at store entrances and other high-traffic areas, reaching over 15 million shoppers every two weeks. The screens feature full-motion digital ads tailored to location, weather, and specific events.

Technological Enhancements:

The screens support interactive features like QR codes and personalized offers, enhancing customer interaction and engagement. This allows Sainsbury's to provide a dynamic and responsive advertising environment within their stores according to Nectar360 managing director Amir Rasekh.

In line with their sustainability goals, Sainsbury’s has installed energy-efficient Waferlite screens powered by renewable energy, demonstrating a commitment to reducing their environmental footprint while expanding their retail media capabilities

Tesco’s Media and Insight Platform

Retail Media Partnership:

Tesco has also been active in the retail media space through its partnership with Dunnhumby, managing its data-driven media network. This allows Tesco to leverage customer data from its Clubcard program to deliver targeted advertising both in-store and online.

Tesco Media and Insight Platform:

More recently , Tesco launched the "Tesco Media and Insight" platform, providing brands with access to shopper data and analytics. This platform enables brands to create more personalized and effective advertising campaigns. The in-store digital advertising includes digital screens and promotional displays strategically located throughout Tesco's extensive network of stores

Cautionary tale from the Past: The Failure of Tesco TV

Launched in 2004 in partnership with JCDecaux, Tesco TV was an ambitious initiative to install television screens in the aisles of Tesco supermarkets, delivering ads and promotional content at the point of purchase. Despite a significant investment of £20 million, the project faced several challenges and was eventually deemed a failure.

Reasons for Failure:

1. Poor Ad Performance: Tesco TV struggled to attract advertisers, leading JCDecaux to reduce ad rates by 30%. Advertisers were unhappy with the intrusive nature and poor placement of the ads.

2. Customer Experience: The screens were considered overly intrusive and poorly placed within the stores, negatively impacting the shopping experience. Customers found the abundance of screens overwhelming and irritating.

3. Technological and Operational Challenges: Maintaining the technology and updating content across hundreds of stores proved complex and costly.

Transition and Rebranding:

In 2007, Tesco transitioned from JCDecaux to Dunnhumby, rebranding the network as Tesco Screens. This shift focused on enhancing the customer experience and leveraging better-targeted advertising strategies but by 2009 the format was removed.

Conclusion: Lessons and Future Directions

The rise of retail media networks offers significant opportunities for UK retailers to enhance customer engagement and generate new revenue streams. However, the lessons from Tesco TV highlight the importance of prioritizing customer experience, leveraging data effectively, and balancing digital and physical elements.

In fairness both JC Decaux and Tesco were ahead of the times in particular where we reference some of the challenges, they faced. With today’s screen capabilities and brand experience with digital signage a lot of the issues they faced would not exist today.

Successful retail media strategies must integrate seamlessly into the shopping environment, enhancing rather than detracting from the customer experience. As retailers like Sainsbury’s and Tesco continue to innovate, the future of retail media looks promising, provided they heed the lessons of the past and remain focused on creating a seamless and enjoyable and consumer centric shopping experience.