Even before the inception of the retail media network, retailers have been vying to reach the customer digitally. However, despite potentially being the most consequential, with the high volume and frequency of shopper traffic, the physical store still hasn’t been fully tapped into from a retail media perspective.
Digitizing the physical store offers four significant benefits for retail media networks and brands looking to engage customers in new and meaningful ways.
Expand audience reach
Data from eMarketer suggests that in-store media has the potential to reach up to three times more customers compared to owned digital channels for most retailers. This is especially important for retailers with an extensive physical footprint, but lower comparative ecommerce penetration.
If you exclude major ecommerce retailers, retail media networks can only provide shopper behavior insights on the 5-20% of their customer base that engage through ecommerce, per eMarketer. That means retail media networks could potentially be missing out on upwards of 80% to 95% of in-store audiences and their browsing behavior.
Protection from industry threats
One of the most important and not commonly talked about benefits of digitizing stores is protection from industry threats. Most retail media networks have only two meaningful revenue-driving channels: on-site and off-site digital media. Retailers control their on-site channels, but not their off-site channels. Therefore, expanding in-store as a revenue-driving, owned and completely controlled channel is important, especially in a highly competitive and quickly changing industry.
Foster a brand-safe environment
While TV, social media or the open web offer value, stores naturally provide an environment where brands don’t have to worry about negative external associations with their products. Additionally, when shoppers are in a store, they’re at their highest point of purchase intent where the right branded content can be most effective in contributing to what ends up in their basket.
For example, imagine a person walking into a grocery store on a weekly shopping trip without any plans to buy pasta sauce. Inside the store, they see a video of a delicious-looking recipe using a specific brand’s pasta sauce they’ve never tried before. Using similar highest point of purchase ads as a proxy, it’s 5% or more likely the shopper is inspired by the video and adds that pasta sauce, and the other recipe ingredients, to their cart and heads to the checkout line.
Connect with unengaged customers
In-store digital media creates opportunities to engage key audiences otherwise not reachable through other channels, such as linear TV or ad-free CTV.
Gen Z and millennials spend less than half the amount of time watching linear TV compared to Gen X and less than one-third compared to baby boomers, according to eMarketer. However, Gen Z and millennials make up 30% to 80% of in-store-shopper audiences depending on the retailer. Reaching the customer where they are engaged is crucial for retail media growth.
The digitization of the physical store will play one of the most critical roles in the evolution of retail media networks. The retailers that get the strategy and execution right will quickly become market leaders that drive value for the brands they support. Adding in-store as a channel option will provide brands with even more omnichannel opportunities.
For brands, a digitized store presents opportunities to connect with shoppers at the highest point of purchasing intent in a brand-safe environment, engaging consumers who may be otherwise unreachable.
