Financial Times: Supermarkets Eye Opportunities with Retail Media

According to an article in the Financial Times, “supermarkets are generally looking for profitable ventures, like selling fuel, to stay competitive on food. The latest involves your eyeballs — and your data.”

“There has long been talk about the opportunity presented by the growth in ecommerce, combined with supermarkets’ customer data particularly from loyalty programmes. The idea is to sell ads, either in-store or online, to consumer goods companies desperate for targeted marketing and measurable returns.”

In their conference coverage, Winsight Grocery Business (Retail media plays starring role at Groceryshop) also pointed out the considerable buzz around the industry’s growing retail media capabilities. “Just a sampling of grocery retailers upping their retail media game recently include Hy-Vee, Albertsons Cos., Ahold Delhaize USA, The Kroger Co. and Giant Eagle, among others.”

Consumer goods manufacturers are showing an appetite for allocating more of their marketing budgets with the retail media networks of key partners, while the lucrative opportunity afforded through their own advertising service is motivating supermarket chains. According to Boston Consulting Group, retail media is estimated to be four times as profitable as the core grocery business on a gross margin basis.

And while the profit enhancement that can be captured via personalized advertising is attractive, the FT article (The supermarkets’ next big product is your data) cautions that there are risks retailers need to consider, including relationships with suppliers and the effects on traditional trade budgets.

“But the biggest test may be whether retailers can resist the temptation of high-margin advertising sales in the name of preventing food customers from feeling overwhelmed by marketing, either in-store or online. The success of retail media will rest on whether grocers can use customer data to sell advertising without making shoppers feel like a piece of meat.”

Optimizing audience selection and timing of messaging is a proven way to increase relevancy and combat marketing fatigue. If a message has timely relevance, it has a better chance to be seen by customers, resonate with them, and drive purchasing. Incorporating localized weather-driven demand analytics is an effective way to better target when and where to promote a product.

Leveraging predictive weather-driven demand analytics for specific product categories is a great way for a supermarket’s supplier partners to identify opportunities to allocate budget to retail media and improve return on advertising spend (ROAS).

And chances are, the better returns will have suppliers coming back time and again to take advantage of future opportunities. Digital marketing that overlaps with favorable, weather-induced demand leads to a larger than expected sales boost. In tests with clients, Planalytics has seen 2x-3x ROAS improvement versus the control group that has not been selected based on expected weather-influenced purchasing impacts. Learn more.

“Retail media growth has taken off in the past few years,” according to the Winsight article. “EMarketer estimated that U.S. digital retail media ad spending jumped 57.3% from $13.23 billion in the 2019 pre-pandemic period to $20.81 billion in 2020, surged another 49.3% to $31.06 billion in 2021 and then climbed 31.4% to $40.81 billion in 2022. The e-commerce researcher projects the nation’s digital retail media ad expenditures to rise 25.8% to $51.36 billion for 2023 and increase a further 19.3% to $61.15 billion for 2024.”