In recent years, I’ve observed how the price war in the grocery sector has made the customer experience more unpredictable and less transparent. When customers chase discounts that they themselves are indirectly funding, there’s a growing need for a more sustainable business model. Retail Media might be part of the answer.
Jørn Olsen, Director of Retail Media and Analytics at ZetaDisplay, explores the real value Retail Media can have in building a healthier retail business model and loyal relationships with customers.
I’m not saying you win the barbecue battle simply by advertising next to the products, but because it’s really about pricing strategies and customer experience.
Earlier this year, I read an article in Aftenposten where Ole Robert Reitan, CEO and co-owner of one of the largest retailers in the nordics, strongly criticized the current pricing practices in the Norwegian grocery market. He highlighted how a system of cross-subsidization has led to artificially low prices on selected products like pork chops during barbecue season.
By adding a few extra cents to most products, retailers create a “war chest” that lets them subsidize key items to attract customers into the store. The problem is that this reduces price transparency. As a consumer, I hardly know what anything really costs anymore. One day I pay a premium, the next day it’s a standard price, and suddenly it’s all on sale. There’s no consistency. Worst of all, it’s the customers who end up financing these “deals” without even realizing it.
The hunt for discounts is unlikely to go away, so those of us working in this space need to find smarter ways to respond. For me, it’s about giving customers better, more transparent experiences, while also building a healthier retail business model.
Retail Media is one of the most exciting tools we have to do just that.
Earlier this year, I heard Mark Williamson from Costco speak at the NRF conference in New York. He shared that their Retail Media strategy isn’t about maximizing revenue, but about using those funds to offer better prices to customers. Costco can afford lower margins because Retail Media contributes directly to the bottom line. At the same time, they use in-store screens to support the shopping experience and the hunt for great deals.
I like that perspective. Retail Media isn’t just about selling ad space in stores, it’s about creating value for everyone involved: the customer, the retailer and the advertiser.
We’ve worked closely with one of Sweden’s major grocery chains and asked customers directly: What do you think of digital screens in-store? The response surprised many with an overwhelming 79% being positive about in-store digital signage. They felt the screens made the store look more modern and attractive. It’s not about forcing messages on people, it’s about helping them make decisions at the right moment. To do that, we need to use data smartly. The goal should always be relevance, not noise.
Advertisers also have demands. They want proof of performance. Luckily, Retail Media offers some of the best conditions for this. With first-party data and A/B testing, we can measure incremental effects in ways few other channels can match. It also opens up opportunities to create synergy across other media channels. Justin Gibbons, UK-based media researcher, for instance, has described how exposure in one channel can improve conversion in another. It’s about thinking holistically, not getting fixated on ROAS alone.
Retail Media is a full-funnel channel. While it’s often used for conversion-focused campaigns, I believe we’re on the verge of a major opportunity to integrate top-funnel, mid-funnel and bottom-funnel activities. Programmatic buying, for example, lets us reach customers at home, via outdoor media and all the way to the store shelf. And when first-party data from retailers powers it, the impact is even stronger.
In the store, it’s not just about the screen locations. The real value lies in the people present. Retailers have deep insights into who is in their stores and this offers a massive competitive edge. I believe more players will soon recognize this potential and when that happens, we’ll see a ketchup effect.
Retail Media isn’t the future. It’s already happening. And I’m excited to be part of what comes next.