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What grocery chains need to know before implementing in-store retail media

Retail media networks, or RMNs, are a major trend that grocery store owners cannot afford to ignore

Yaron Toren.pngYaron Toren is the chief marketing officer of Shopic, the maker of a computer vision-powered clip-on device that turns standard shopping carts into smart carts. Yaron has 20-plus years of strategic marketing experience, crafting compelling corporate stories for tech companies. Beyond orchestrating Shopic’s marketing efforts, he is part of the leadership team overseeing the development of Shopic’s next-generation retail media solution.

Retail media networks, or RMNs, are a major trend that grocery store owners cannot afford to ignore. They offer an enormous opportunity for retailers and advertisers, with revenue predicted to grow from $19.4 billion in 2022 to $27 billion by 2027. 

Instead of showing people ads while they relax at home or commute to work, RMNs display advertising content to people while they shop, which makes for a far more influential context, especially in the grocery industry. 

RMNs began with general ecommerce retailers like Amazon but expanded into the ecommerce apps and websites of grocery retailers like Kroger, Albertsons, and Tesco, as well as chains like Target and Walmart. Regional grocery chains like Save Mart in California and Nevada are joining the online RMN trend as well, and now in-store retail media is emerging as a force to be reckoned with. 

For retailers, RMNs are appealing because they cost relatively little to implement and are therefore major profit centers, as opposed to the core business of selling products. Profitability is a concern for every retailer, but grocers may worry more than most, with average profit margins as tight as 2.5% – and those margins are getting skinnier as inflation bites. 

The threat of a drop in consumer spending, supply chain difficulties, labor costs and shortages, and overhead costs all heighten anxiety for grocery executives. It’s hardly surprising that grocers have taken a leaf out of ecommerce’s book. Forrester estimates that the average profit margins for in-store RMNs exceed 70%.

This is why Walmart began selling ad space on its in-store checkout and display screens back in 2021, and Amazon followed suit in October 2022. Meanwhile, Kroger is expanding its in-store retail media to several hundred stores by adding more digital signage, and in the UK, Tesco supermarkets has 500 screens serving ads in its stores as part of its RMN. 

The momentum for in-store retail media is strong. More than 60% of surveyed executives from CPG brands said they plan to increase retail media spend this year, and there’s a big demand for in-store retail media as part of the mix. It’s a good time for grocers to join the trend and offer in-store digital ads, but only for those who do their due diligence and know what to expect. 

Retail media success requires a strong foundation
There’s already a lot of competition when it comes to in-store retail media, both within the supermarket category and beyond. A number of big-name chains like Best Buy, Tesco, Macy’s, and Kroger have established RMNs, not to mention a number of medium-sized grocery chains. That said, there could be a second-mover advantage for regional grocery chains that are setting up their retail media networks now. 

For many supermarkets, successful implementation hinges on finding the right talent who understands the ad media side and can oversee the technical aspects of an RMN. You also need to find suitable advertising partners, manage ad inventory, set up and maintain digital infrastructure for delivering ads, ensure security, comply with data privacy, and deliver excellent CX. 

It sounds like a big ask, but retailers entering the space in 2023 don’t have to go it alone or reinvent the wheel. Although massive retailers like Amazon, Walmart, and Target developed their own proprietary RMN technology, plenty of others turn to all-in-one platforms that manage infrastructure and ad inventory, uphold security and data privacy, and more.

Costco, Kohl’s Meijer, and ShopRite are among the big names using RMN platforms. These platforms can be the middleman in serving ads, and also offer tools for attribution, analytics, and easy collaboration and data sharing with brands. 

Customers are highly savvy
Grocers need to remember that customers are ad-sensitive. They don’t want to feel tricked into purchase choices or served content that doesn’t disclose its own promotional nature, and they want to feel that you care about them. They are wise to tactics like sponsored product placements and sponsored reviews, and they are often weary of it all. 

A recent Washington Post piece posits that Amazon might have betrayed shoppers’ trust by oversaturating shopping search results with sponsored listings, which occupy about half of these web pages.

Consumers will gladly share their personal details, but only if it’s worth their while, and if they believe that you won’t sell or abuse their data. A study by MAGNA Media Trials and Ketch reports that Companies with strong data privacy policies enjoy 23% more purchase intent. 

This highlights the importance for grocery chains to serve ads that help the customer, like alerting them to special offers on products that complement those they’ve recently placed in their carts or giving them extra information that helps them choose between two similar items – which calls for ads that are contextually relevant. In my company’s experiments with these types of personalized recommendations, we’ve found shoppers respond positively, with some smart cart touchscreen ads yielding up to 50% conversion rates.

In-store retail media can also give shoppers useful information like nutritional details or allergy warnings, in a format that’s easier to read than tiny print on the side of a packet. Even better, you can use it to deliver valuable content like storage advice that extends product shelf life, or recipe recommendations with the price and store location of other ingredients. 

Brands are hungry for data
As well as pleasing shoppers, grocery chains also need to meet demands for data from the brands who pay for their in-store digital ads. While conversion attribution data is certainly in demand, sharing insights into shopper preference trends can also strengthen your relationships with manufacturers and distributors. 

Brands used to rely on third-party cookies to refine their marketing campaigns, but now they’ve lost that treasure trove. Your first-party data might just be their best new source for insights into customer preferences and behaviors. 

CPG brands are looking for connected data from across all your platforms, including social media channels, your app and your website, loyalty program data, and information about interaction with in-store ads and the customer’s path through the store. 

What’s more, they want this data to arrive preprocessed and easy to access, in formats that they can feed into their own analytics. Thankfully, leading RMN platforms often include this kind of capability. 

In-store ads have to reach a high bar
Last but not least, in-store digital ads have to go way beyond flyers and posters. Consumers are used to high-quality video ads online, and they expect the same kind of experience in stores. 

Hyper-realistic 3D billboards and oversized digital signage support far more creative and interactive experiences, and many thought leaders are predicting that AR will enter the space soon. 

As a result, quality storytelling, engaging copy, and HD visuals are all a must to attract and retain consumer attention. 

In-store retail media is pulsing with promise 
With today’s all-in-one platforms, personalization capabilities, smart signage opportunities, and digital media infrastructure, in-store retail media is definitely worthy of consideration. When done right, they can help grocers to gain a new, high-margin revenue stream, while strengthening relationships with brands and providing new types of value to shoppers. 

Grocers can run with the wolves when it comes to in-store retail media, as long as they go in with the right expectations. 

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