The latest projections on the value of retail media should serve as a wake-up call for retailers who are yet to recognise the immense potential of leveraging their onsite, offsite and in-store media channels to drive revenue growth, reinforcing the need for retailers to act now, or face years of playing catch up. 

According to recently released data from WPP-owned GroupM, the global retail media market is expected to reach a staggering USD $125.7 billion this year alone, and by 2028, it is predicted to surpass TV advertising spending, reaching an annual total of US$176 billion. Just think about that: within five years, retail media expenditure is projected to exceed that of television. It’s an astounding shift and one brought about by the shift to eCommerce, the phasing out of cookies and need for first party data, demand for greater marketing personalisation and accountability when it comes to ROI. 

In Australia, PwC forecasts that retail media spending could hit almost $3 billion a year by 2026. That is a significant chunk of new additional revenue for retailers to be chasing after, however, most are still moving at a glacial pace when it comes to building out their retail media networks and risk missing out on the expected retail media goldrush.

While major retailers such as Woolworths’ Cartology and Coles 360 continue to make substantial inroads in developing their retail media networks, many other retailers of varying sizes lack a sense of urgency. But they do so at their own risk. Last year I spoke with a prominent Australian online retailer about their retail media strategy, only to be told they would ‘look at it’ in 2024. While that is only six months away, implementing a robust retail media strategy can take time. While building an offsite presence, through the likes of Meta and Google can be done simply and quickly, it may require organisational restructuring and change management when it comes to activating onsite – the retailers owned channels such as its website – and in-store media. 

Retailers face a critical decision: act now to build retail media networks that can capitalise on the projected boom, in what is fast becoming a fiercely competitive landscape, or risk falling behind and taking less of the share. Here are some reasons why retail media should be the C-suites’ top priority. 

Protecting margins in turbulent times

Disruptions in supply chains, a shift towards regionalism, macroeconomic headwinds and the need to safeguard and expand market share mean retailers are looking to protect and prioritise their margins. Additional, incremental revenue earned by retail media helps cushion the impact of softening margins, while giving retailers a competitive advantage.

Retail media offers high margins for retailers of up to 90% for onsite, 80% for instore and up to 40% for offsite. For brand advertisers using retail media networks, they get access to first party, data-driven insights, for more effective customer targeting.

Take the example of Walmart, whose operating margin dropped from 5.4% to 4.8% in 2021. While their margins slipped this was offset by their retail media group, WMG (Walmart Media Group), which generated a staggering $2.9 billion in revenue during the same period. Similarly, Amazon raked in $31.2 billion in revenue through its retail media offering, effectively offsetting margin pressures it faced. 

A retail media network enables retailers and brands to fast-track revenue, irrespective of macroeconomic environmental factors.

The first mover advantage

In the fast-paced retail world, timing is crucial. Those who seize opportunities early often gain a significant advantage over their competitors. retail media networks not only provide an additional revenue stream with attractive profit margins, but also enable retailers to reinvest those earnings into product development, cost management, and customer loyalty initiatives.

History has shown that first movers typically capture 70 to 80% of the market, leaving latecomers struggling to catch up. The longer retailers delay their entry into the retail media landscape, the harder it becomes to compete and establish a strong foothold.

Measuring ROI and demonstrating value

Traditional above-the-line media channels often struggle to provide accurate ROI metrics. In contrast, as we move towards a cookie-less future, retail media networks bring brands closer to the consumer point of purchase while enabling closed-loop attribution that provides accurate and timely effectiveness reporting. 

The shift toward accountability and ROI places pressure on retailers to demonstrate measurable returns, which can take time to develop and implement. As marketing science advances, the need for rigorous reporting and measurement will become more pronounced and those retailers with the strongest attribution models, built on their extensive data sets, are the ones most likely to benefit. 

With retail media ad spend set to overtake that of TV in just five years, the first movers and fast followers will be best placed to leverage their on-site, off-site and in-store media channels. 

These market leaders and early adopters will have already established their networks, secured partnerships, and gained expertise, making it challenging for latecomers to catch up. With margins of up to 90% for retailers and seven times return on advertising spend for brands, the time for retailers to build their retail media networks is now, those that delay will be playing catch-up in a game they need to be playing in. 

Troy Townsend is co-founder and CEO of retail media platform, Zitcha.