In recent years, e-commerce has disrupted traditional brick-and-mortar retail, forcing retailers to re-evaluate their strategies. However, over 85% of all retail sales in the United States still occur in brick-and-mortar stores, making them an essential part of the retail experience. Offering shoppers a tangible and immersive environment that online shopping cannot replicate. With the advent of digitization, physical stores now offer new opportunities for brands to connect with customers through ‘in-store retail media’.
According to a study by Insider Intelligence, the in-store audience for 13 leading US brick-and-mortar retailers including Walmart and Target, is 70% greater than their digital audiences. Brands are increasingly turning to in-store retail media as a powerful tool to engage with customers at the point of purchase, driven by the growing demand for personalized and engaging shopping experiences.
Significant investments have been made to support online retail media networks, with growth almost exclusively coming from digital audiences. And with the vast majority of all shopping still happening in brick-and-mortar stores, the potential of ‘in-store retail media’ is enormous. Tech companies like Microsoft, Walmart and Amazon are introducing more solutions to enable brands to advertise in physical stores.
What is ‘in-store retail media’
In-store retail media pertains to all types of advertising or marketing that happen within a physical retail store. This covers a variety of advertising channels, such as dynamic and interactive media experiences like brand displays on store shelves, video advertisements on TV’s, end caps, cooler doors and checkout aisles, as well as in-store radio and product packaging.
Effectiveness drives growth
In-store retail media is growing 10 times faster than any other advertising media. Reaching around $19 billion in the US over 2023 after the pandemic, and up from $8.4 billion in 2018. One reason for this growth is the effectiveness of in-store media in driving purchase intent, with data showing that it is 70% more effective compared to traditional digital advertising. Additionally, with 65% of shoppers making purchase decisions in-store, in-store retail media has become a critical channel for brands to influence consumer behavior and drive sales. Retailers and brands can use various tools and technologies like point-of-sale data, mobile location tracking, and beacon technology to measure the effectiveness of in-store retail media campaigns. By accurately attributing the impact of in-store retail media, brands and retailers can determine the ROI of their advertising efforts and allocate their marketing budgets accordingly.
Benefits of in-store retail media
Retail media networks are gaining popularity due to the deprecation of third-party cookies and the increasing importance of first-party data. Retailers and brands benefit from more effective and privacy-conscious digital advertising. Boston Consulting Group (BCG) reports that retail media can generate margins of 70% – 90%, providing a lifeline for retailers facing profit pressure from inflation and price-sensitive customers. As a result, 80% of advertisers plan to increase retail media spending over the next year. Other benefits include:
- Increased sales: In-store retail media can help drive sales by creating more engaging and interactive experiences for shoppers, and influencing purchase decisions at the point of sale;
- Improved customer engagement: In-store retail media can help brands and retailers better engage with customers, by providing them with useful information, recommendations, and promotions;
- Enhanced brand awareness: In-store retail media can help increase brand awareness and recognition by showcasing products and services to shoppers, and creating a more memorable brand experience;
- Better targeting and personalization: In-store retail media can be targeted to specific customer segments based on their shopping behaviors and preferences, enabling more personalized and relevant messaging;
- Increased loyalty and repeat business: By providing a more engaging and satisfying shopping experience, in-store retail media can help build customer loyalty and encourage repeat business;
- Real-time optimization: In-store retail media campaigns can be optimized in real-time based on shopper behavior and feedback, enabling brands and retailers to adjust messaging and promotions to better resonate with customers.
In-store retail media solutions
Here are some in-store retail media solutions that offer brands and retailers a range of powerful tools and platforms to reach and engage with shoppers in physical retail spaces, driving sales and business growth.
- PromoteIQ In-Store is launched by Microsoft, which will assist retailers in exploring in-store retail media activations with content and hardware partners. This offering will be available within the next 12 months. Given that in-store retail media activations require additional physical setup and equipment such as digital signage, PromoteIQ is collaborating with partners like Cooler Screens Inc. to develop a platform that is interoperable with the ecosystem. With this announcement, the Microsoft PromoteIQ platform will offer the most comprehensive and all-encompassing suite of retail media products, targeting tools and measurement capabilities in the market. This will empower retailers and brands to reach their customers online or offline, anywhere and at any time;
- Digital signage ads is launched by Amazon in their Amazon Fresh stores, which are a type of in-store retail media. These digital displays, located near the checkout area, allow brands to showcase their products and promote special offers to shoppers at the point of purchase. The addition of digital signage ads in physical stores is part of Amazon’s strategy to leverage their growing brick-and-mortar presence for advertising revenue. By offering these types of in-store retail media solutions, Amazon can help brands drive awareness and increase sales through targeted advertising;
- Walmart Advertising Partners is launched by Walmart, a platform that allows brands to reach shoppers with targeted ads while they are shopping in physical Walmart stores. They also launched a demand-side platform (DSP) for in-store advertising, that allows brands to purchase targeted ads on Walmart’s digital screens located throughout their stores. And Walmart is also testing new in-store retail media solutions such as virtual reality shopping experiences and smart shopping carts that can detect when items are placed in them, and offer personalized recommendations and promotions to shoppers in real-time.
Challenges
One major challenge is the cost of implementing in-store retail media solutions. Retailers may need to invest in new technologies and infrastructure, such as digital signage or smart shelves, to deliver targeted and dynamic advertising experiences in their stores. Additionally, there may be ongoing costs associated with maintaining and updating these systems.
Another barrier is the complexity of data management and privacy concerns. In order to deliver effective in-store retail media campaigns, retailers and brands need access to shopper data, including information about their browsing and purchasing behavior. However, managing this data and ensuring that it is collected and used in compliance with data privacy regulations can be challenging.
Finally, there may be a learning curve for retailers and brands in terms of developing effective in-store retail media campaigns. Unlike traditional advertising channels, such as TV or print, in-store retail media requires a deep understanding of shoppers’ behavior and preferences in order to deliver targeted and relevant messages. This may require new skills and expertise, as well as a willingness to experiment and iterate on campaigns in real-time.
Despite these challenges, online grocery sales accounted for just 4.4% of total global grocery sales. Any retailer that is selling a lot of groceries knows more than 90% is sold in-store, making in-store retail media a huge opportunity for them.
How to effectively execute strategies
To effectively execute in-store media strategies, brands and retailers should consider the following tips:
- Understand your audience: It’s important to know your target audience and their shopping habits, preferences, and behaviors. This can help you create more relevant and engaging in-store media campaigns that resonate with your customers;
- Leverage data: Use data analytics to track shopper behavior and engagement with in-store media, and optimize campaigns based on these insights. This can help you improve campaign performance and drive better ROI;
- Tailor messaging to the store environment: In-store media should be designed to fit seamlessly into the shopping environment, with messaging that is relevant and appropriate for the store setting. This can help create a more natural and engaging experience for shoppers;
- Utilize technology: Use technology such as digital signage, interactive displays, and mobile devices to create more immersive and interactive in-store media experiences. This can help capture and hold shoppers’ attention, and increase engagement and conversion rates;
- Coordinate with other marketing channels: In-store media should be integrated with other marketing channels such as social media, email, and mobile advertising, to create a consistent and cohesive brand experience across all touchpoints.
By following these tips, brands and retailers can create more effective and impactful in-store media strategies that engage and influence customers, driving sales and building brand loyalty.
The future of in-store retail media
The future of in-store retail media looks promising as retailers continue to invest in digital technologies and brands increasingly embrace the digitization of physical stores. As technology continues to evolve, we can expect to see even more sophisticated and targeted in-store media, such as personalized messaging based on individual shopper data. Additionally, retailers are likely to integrate in-store media with e-commerce, using it to drive online sales or leveraging online data to inform their in-store marketing efforts. This convergence of in-store and online retail media could lead to a more seamless shopping experience for consumers, with retailers able to offer personalized recommendations both in-store and online. Overall, the future of in-store retail media is exciting, with new possibilities for engagement, personalization and integration with e-commerce.