Retailers have a big job to do in educating the market about the benefits of retail media options, according to Anthony Carr, MD of FMCG and retail sales and capability consultancy Sellex.
He believes that retailers are going to have to re-think their engagement strategies with brand owners to achieve their own as well as their customers’ objectives. However, Carr said he doubts whether they are currently successfully selling all the benefits or scale that retail media offers.
Carr’s comments follow recent reports that Tesco has urged its suppliers to invest in an upscaling of its retail media network as it plans for a rapid expansion into new revenue streams.
“This isn’t exactly a surprise,” he said. “The trend for investment to be moving in-store as consumers increasingly fast forward their way through television advertising means that more and more of a brand owner’s discretionary spend is likely to be – and should be – going to happen closer to where the shopper is making their final purchase decision.”
The Tesco announcement came just a few months after Sainsbury’s announced the evolution of its 2020 Food First Strategy.
“This begged the question of how branded suppliers could walk towards Sainsbury’s to unlock value in their relationship,” said Carr. “We said then that we believed that in-store ‘commercial’ marketing was a key enabler in developing that relationship – but one that many businesses as of now, fail to fully understand.”
He added: “The fact of the matter is that shopper marketing is commercial marketing. It is within the domain of all functions within a branded manufacturer, or at least it should be. Shoppers may be making their buying decisions ever closer to the point of purchase, but it is questionable whether brand teams are close enough to the discussion to be taking effective action to leverage this.
“Unquestionably, the retail media space represents a big profit-driving opportunity for retailers. But we anticipate that there is likely to be quite a high level of distrust among brand teams about rate card and likely return on investment. This means it is important for retailers to get the roll-out right, to meet head-on and counter a likely degree of cynicism from brands.
“Retailers will have to sell hard to brand owners and they’re going to have to be transparent and quite open book around return on investment. In short, those that can be open, transparent, creative, and collaborative will be the ones who win out.”
Carr notes that brand owners also need to ensure their contact strategy with customers is right. With ever-more demands for investment, he believes that there is a real threat of investment mistakes if brands don’t have the right project objectives, test and learn environment and pre-and post-analysis infrastructure.
Brand owners also need to be careful in how they ensure brand assets and objectives are translated through to execution.
“There are lessons to learn for both sides here,” Carr said. “There is an open-mindedness required from brand owners, and there’s an open-mindedness and an open book mentality required from the retailer.
“We have heard many people saying that supermarket environments are generally looking quite tired. The rise and potential of retail media and in-store marketing is a big opportunity for retailers and brands if tackled correctly, but also a very big threat to margins if approached blindly. The question for brands is which side of the debate they will be on; how exciting their plans for shopper engagement can be, and how can they bring them to life profitably in partnership with the retailer.”
