Why retailers should not just follow the Amazon retail media model

By 2025, retail media is expected to attract more worldwide investment than TV with ad spend in Europe forecast to reach €25bn by 2026.

Yet retail media is by no means a ‘new’ industry, in fact it’s been about for decades both here in the UK and in the US. Even before the e-commerce boom, around the time of the Covid pandemic, the US and the UK were respectively the second and third largest e-commerce markets worldwide.

Whilst it wasn’t the first retail media estate, the launch of Amazon’s first network in 2012 heralded the arrival of retail media networks (RMNs) in their modern form – using customer data and integrating on-site and off-site advertising to create a tailored customer experience.

Over the last few years, the wider retail media landscape has continued to expand, with the majority of the growth coming from Amazon. But this is now changing. Retailers are starting to recognise that they themselves can be media owners with the ability to improve their own profitability, and also that of their supplier brands, through their own platforms which speak directly to shoppers precisely when they’re in the mindset to buy. Certainly, a compelling proposition for a supplier brand looking to reach its most relevant target market.

With the deprecation of third-party cookies on the horizon, the real value of retail media to brands is its ability to provide specific, quality data about consumer behaviour. And whilst Amazon is most certainly king when it comes to detailed data on customer behaviour, searches, purchases and even content consumption through its own e-commerce platform and ecosystem, there’s one area where it certainly cannot compete: the physical store.

There’s more to retail media than online

According to recent ONS figures, digital commerce accounted for just over a quarter of all retail sales across all categories in the UK. The same is true in the US where most retail brands have bigger audiences across their physical environments than their digital ones.

Yet in the US, investment in retail media has been heavily skewed towards digital. With strong loyalty programs, retailers can utilise their first party data to refine the targeting of both search and digital ads on their own ecommerce platforms, as well as off-site, to drive traffic online and into stores.

This has to an extent started to be replicated in the UK, with retailers like Tesco, Sainsbury’s, Boots and Co-op, all implementing loyalty card exclusive pricing in an effort to build their addressable audience database and scale to advertisers. We’ve also seen a push for UK retailers to launch connected TV partnerships with the likes of ITVX and Channel 4, again emulating the US.

But retail media is more than just about online. And the path to purchase is far from linear. Therefore the challenge for marketeers is to design their retail media campaigns to engage with shoppers wherever they are and however they want to shop, both in-store and online.

Unlike Amazon, this is where retailers have the distinct advantage - in their physical presence. Our own research shows that consumer behaviour is blurred across digital and in-store with 43% of shoppers preferring to shop both in-store and online, compared to 12% choosing to shop online only, and 45% in favour of shopping in-store.

Therefore the big opportunity for growth and performance enhancement for retailers and brands sits in omnichannel activations – campaigns that happen both around stores and online.

Omnichannel is critical to retail media

Finessing the omnichannel experience remains a challenge for a lot of retailers and many currently do not have the capability to funnel campaigns across multiple channels flawlessly. True omnichannel retail media seamlessly integrates CTV, digital radio, social, digital commerce, out-of-home media around stores and in-store point of purchase and post purchase communications.

One of the best examples of a retailer who excels at this is Boots. Using the data from its 17 million Boots advantage card customers, it enables the brands it works with to reach the right audience through the right touchpoints, whether that be social, digital, TV (having recently partnered with Channel 4) or in-store. Boots advantage card holders are x1.7 more likely to consider a brand following a Boots media experience. 

Another key focus for UK retailers should be leveraging digital technology to enhance the physical shopper experience, creating a seamless customer journey between online to in-store. From digital screens to programmatic audio, complimented by more traditional in-store elements like POS, these digital touchpoints offer customers a seamless retail experience enhancing their ability to shop and their enjoyment of the process.

Moving forwards, stores are becoming a hybrid digital-physical media entity through the use of beacons, QR codes and geolocation tech which allow brands to map progress around stores and provide customers with personal offers and discounts - integrating behavioural data with loyalty and promotional marketing, and then feeding it back to into the loop of digital commerce and other media.

Whilst Amazon is hailed as the king of digital commerce, what retailers can sometimes forget is that their business model is very different to Amazon’s and in that lies their advantage. Whilst digital retail media is hugely important as a performance driver, it’s clear that omnichannel campaigns which engage with customers through a combination of in-store and digital marketing strategies, powered by rich first party customer data, offer the biggest opportunity when it comes to growth.