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The challenges of retail media for retailers

As we know, retail media has become an increasingly important revenue stream for retailers in recent years with the value of first party customer data exploding. I’ve seen retailers double already mature retail media revenue streams in recent times and know many more retailers looking to do just that looking forward. With a potentially huge commercial opportunity in view, many retailers are mobilising. Whilst the commercial opportunity is real, realising it isn’t easy for retailers as each one must navigate a rapidly evolving landscape and overcome obstacles to ensure success. Here, I touch on a few of the challenges retailers should consider when building effective retail media strategies.


Balancing advertising and customer experience: Retailers must strike a balance between monetising media assets with advertising and providing a positive customer experience. Serving customers too many adverts or irrelevant adverts can negatively impact the customer experience and drive customers away. To combat this, retailers should look to ensure the retail media work-stream isn’t wholly owned by Commercial stakeholders and that discussions on revenue with brands are separated from base trading agreements. Only retailers who work in true collaboration with brands, marrying up their advertising needs with the needs’ of customers will win. Rules of engagement around ‘how’ branded messaged show up as well as ‘which’ messages are delivered will ensure customers can continue to successfully navigate physical and eCommerce environments.


Increased competition: As more retailers invest in retail media, competition for advertising investment will continue to increase. Retailers must differentiate themselves from competitors and provide unique value propositions to attract brands investment. Of paramount importance to brands is the ability to lean on transaction data, see accurate ROAS reporting and leverage interesting advertising mediums. Retailers delivering on these needs, with strong service levels will win.


Measurement and attribution: Retailers must provide brands with accurate and transparent measurement to demonstrate the effectiveness of campaigns. Retailers may be hesitant to provide such transparent reporting, perhaps with a nervousness around how results might impact future investment. Those retailers must know that looking forward delivering against this need is a must or hygiene factor for brands. From experience, retailers need not be nervous. Brands collaborate well with those providing transparent results alongside a commitment to optimise performance.


Privacy concerns: Consumer data privacy concerns are growing, and retailers must ensure they handle customer data responsibly and transparently. Failure to do so can lead to reputational damage and loss of customer trust. With this in mind, retailers may need to temper initial excitement around the commercial opportunity at hand to create a sustainable, long-term data strategy. Retailers shouldn’t do anything that ‘hands over’ the power to use valuable first party data without ensuring appropriate reassurance and safeguards with potential partners.


Data and technology strategy and infrastructure: Of course delivering media campaigns with first party targeting requires retailers to have a scalable and addressable audience as well as a technology infrastructure that supports transforming this data into something targetable, activating this data with media partners and evaluating performance as noted above. This is no mean feat, and requires both investment and strong collaboration between internal departments.

In conclusion, while retail media offers a significant revenue opportunity for retailers, it also comes with its own set of challenges. Only by addressing these challenges head-on, can retailers maximise revenues.

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