Navigating Retail Media: How Can the Industry Finally Deliver on its Promise?
During an executive lunch at the Retail Week Innovation Summit 2024 in London, Diana Abebrese, Global Retail Media Lead at EPAM, discussed the growing significance of retail media as a strategic priority, sharing insights on why the retail media promise is compelling for both brands and retailers, what’s stopping them from achieving the full potential of retail media and how AI can help.
Retail media has quickly transformed from an under-the-radar media channel into a key focus for many retailers. What was once considered a secondary revenue source for retailers is now seen as a major contributor to profitability, offering a high-margin, incremental revenue stream. According to IAB, the UK market is set to hit £1.3 bn in 2025. For brands, the access to retailer’s first-party data, the ability to reach shoppers through the entire customer journey right through to the point of sale and the ability to measure sales attribution are the key drivers to investment.
Source: IAB Europe’s Attitudes to Retail Media Report 2024
There are 113 retail media networks live in Europe today , and, despite the buzz, very few of these retailers are delivering against the retail media promise. Many markets are still playing catch up. In the same way, brands vary in their levels of maturity, with 46% still early in the process.
Source: IAB Europe: Attitudes to Retail Media Survey, 2024. Brands in 27 EU Markets
What’s Stopping Progress?
The retail media journey is faced with its fair share of complexities and challenges. For retailers, one primary concern is to understand how brands allocate budgets and how they can unlock incremental budget pots.
“As a significant player in the industry, I observed the phenomenal transformation of Retail Media and its impact — truly it was massive. However, its investment fundamentally comes from CPGs. They are not going to invest unlimited amounts as they have their own marginal effects, so there will need to be a shift over time. This may lead to an expanded budget eventually, but where this budget is allocated and how it affects commercial models and teams is a critical consideration. As we strategize for what's to come, it's imperative to understand that while the change brought by retail media could be hugely beneficial, it will undeniably reshape the dynamics of the entire sales and marketing teams.” — Head of Strategy of a major UK grocery retailer during one of EPAM’s roundtables.
Yet, the challenges don’t stop at budget allocation. Both retailers and brands acutely feel the pains of rapidly changing market conditions, data and technology fragmentation and the pace of change required to scale their businesses in the face of operational complexity. A sea of data powers retail media activity, and managing, measuring and reporting on these diverse data sources pose significant challenges, primarily when handled manually and with a lack of standardization.
"From my own experience, I can tell you that fragmentation has emerged as a crucial hurdle to consider, especially with the rise in the number of retail networks. The technical and operational complexity induced by the lack of unification within our market limits the choice to a restricted number of partners, while posing a problem of scope and scale. For brands, this presents a unique set of challenges. So, to be one of the top players in this increasingly crowded marketplace, retailers need to put the right efforts into a well-defined roadmap and strategic resources to facilitate access to their inventory. Moreover, they need to be open to interoperability with other players.” — Marc Fischli, Executive Managing Director EMEA, Criteo.
For an in-depth look at the challenges impacting retail media, check out this Total Retail blog written in collaboration with my colleague Liz Salway and me.
Retail Media Enablement Today
To solve these challenges, retailers and brands need streamlined processes, the right tools and experienced teams. Technology is moving in the right direction and fast. As AI enters the retail media arena, it is starting to address some of these key challenges — data vastness, fragmentation and operational complexity — across the full campaign lifecycle both for retailers and brands.
Source: EPAM
The Role of AI within Retail Media
Artificial Intelligence (AI) could well be the game-changing solution for coping with the complexities mentioned above. And whilst retail media is still not driving the majority of retailer AI use cases, it is being discussed and considered at a senior level, and the opportunities are clear. AI technologies and processes can manipulate, analyze and support data insights for retail media. It has incredible potential to build predictive audience segments, forecast campaign performance, manage and optimize campaigns in real time. AI can also help retailers foster up-selling opportunities by providing persuasive evidence of a campaign's effectiveness in a timely manner.
While some may feel apprehensive about embracing AI due to its seemingly complex nature, a look into current retail practices reveals that AI already has several applications and is not an alien concept for the retail industry.
"In addressing the adoption of AI, not just in retail media but across the retail value chain, we tend to overlook the extent of AI deployment already in play within our technology stacks, built over years. It is already embedded in various line-of-business applications provided by software vendors such as forecasting, supply chain inventory management and product recommendations. Its capabilities will undoubtedly continue to expand over the years, but it's a well-established technology, not something new or intimidating. So, it's key to remember not to be fearful of AI, particularly when considering new business models. What's crucial though, is considering whether AI should form part of your retail media strategic framework right from the beginning or be implemented as the program evolves." — Martin Ryan, VP of Retail EMEA, EPAM
There is an opportunity to lead the way or wait and become a fast follower, depending on your strategy. Either way, it’s important to first lay the foundations.
Solutions such as EPAM’s AI-enabled Retail Media Orchestration Toolkit show great promise. Developed on and in collaboration with Google Cloud, it serves as an effective tool for retailers to gather data from different platforms into one easily accessible and manageable place. Combined with AI, such programs help retail media run more efficiently and swiftly and prove its effectiveness more quickly by offering real-time, multi-channel reports.
What Steps Can Retailers Take to Fully Capitalize on the Potential of Retail Media?
In retail media, you have the option to either lead the way or be a fast follower. Either way, these key principles will help you get started:
- Get your data in order: Assess your data sources, identify necessary data points and ensure they can be standardized for consistent analysis.
- Streamline your workflows: Automating is critical for growth, but first, streamline and standardize processes into a unified workflow for better results.
- Engage key stakeholders: Secure stakeholder buy-in, understand needed changes and collaborate to align on goals and challenges.
- And when in the “build” phase: Centralize data in your own cloud instance, define AI proof of concepts with KPIs, use machine learning for predictions, automate processes, design intuitive interfaces and do scale testing.
Streamlining data operations from manual, time-intensive processes with multiple touchpoints to a fully automated system — with daily live data, minimal user intervention and seamless integration of data collection, mapping, processing and visualization — can boost revenue opportunities by 20%, double campaign performance and cut costs and time by 40% (based on EPAM’s experience on similar projects).
Integrating retail media into the business strategy is no longer just an enticing option — it's a necessity for any aspiring retailer. It's also clear that AI's maturing technology will continue to enhance retail media tactics, taking it a notch higher. A robust retail media strategy is the key to unlocking success in the evolving retail landscape, with AI acting as one of the essential tools to make it happen. The question for retailers is clear: Are you ready?
