Retail media continues to be an opportune growth area in the broader local media ecosystem. It’s so large, in fact, that there are subcategories emerging with their own strategic nuances and playbooks. These often map to high-stakes verticals like big-box, luxury, fashion, and sporting goods.
The latest of these retail media subsets to come to our attention is grocery. Retail media revenue within the category is estimated at $8.5 billion according to Grocery Doppio, a research arm of Incisiv. The firm also projects that the number of grocery retail media networks will double over the next 18 months.
To pause for definitions, when we say retail media networks, these are typically first-party networks of digital screen real estate and other media endpoints within a given grocery brand. For example, grocery giant Albertsons has its own retail media network throughout its properties (Safeway, Vons, etc.).
Ample Headroom
Why is there so much excitement and investment in grocery-centric retail media? Building on all of the foundational retail media opportunities (more on those in a bit), grocery has unique customer dynamics. For one, grocery shopping is a high-frequency activity. Compare that to, say, car shopping.
Bullish growth projections in grocery-based retail media also stem from its early stage. Given retail media’s rapid rise in a relatively short period, there’s still ample headroom to grow into. There’s also a lot more still to develop among late adopters, and down-market brands such as regional chains.
This growth opportunity also bears out in the numbers. Going back to Grocery Doppio’s data, a recent survey found that 73 percent of grocers see retail media as a C-level priority. 88 percent even report that this form of monetization is a top growth priority. It’s all about revenue incrementality and diversification.
As for how that interest turns into action, most of the grocers surveyed signaled interest in executing their retail media programs via white-labeled platforms. This lets them accelerate deployments by resting on established systems, which of course is good news for the Microsofts of the world.
Fish in a Barrel
Another key interest driver among grocers is demand. As retail media continues to gear up, CPG brands expect it as a way to drive sales with promotions that sit within feet or inches of the POS. The result is that grocers that offer retail media options can build deeper relationships with the brands they carry.
Sticking with that last point, it makes retail media somewhat of a no-brainer. What other marketing format enjoys brands clamoring to activate and accelerate their media spend? And given that these are existing/warm relationships, retail media is like shooting fish in a barrel from an ad sales perspective.
Brand interest in retail media traces back to its broader merits. Due to the proximity to the point of sale, it doesn’t get much more lower funnel than in-store promotions. It’s also contextually relevant, and can even be viewed by shoppers as organic and educational (think: how-to videos) when done right.
Altogether, adoptive retailers are sitting on an opportunity to grow and diversify revenue. Of course, this isn’t new, and has been developing for years among early adopters like Lowes’ One-Roof Network. But in the grocery subcategory, the next few years could be a land grab for retail-media software players.
Header image credit: Scott Warman on Unsplash
