When seemingly every industry is standing up its own version of a retail media network (RMN), grocery chains stand out with unique shopper data and insight into the real purchase behaviors of consumers.
These are people who are ready to spend money, said Bobby Gibbs, a principal in the retail and consumer goods practice at consulting firm Oliver Wyman.
“That helps increase the appeal [to advertisers] compared to a more general platform,” he said.
Grocery stores, meanwhile, operate on razor-thin margins, and they’re always looking for ways to increase profit without raising prices. Consumer pushback against price hikes have peaked over the past few years as inflation surged.
Grocery chains are therefore wising up to the value of their customer data and the potential of retail media.
RMN revenue is expected to hit $129.9 billion in the US alone by 2028, according to the Mars United Retail Media Report Card, representing nearly one-fourth of all US media spending by that time. Grocery retail media, specifically, was projected to reach $8.5 billion last year, according to grocery research firm Grocery Doppio.
There’s no retail media easy button
In many ways, the rise of retail media networks represents an evolution of the established relationship between grocery chains and advertisers.
But now, grocery chains offer a growing array of digital advertising and out-of-home opportunities, from in-store audio to in-app ads that can be targeted directly to consumers who frequently buy a competing brand.
Still, there’s no retail media easy button, either for advertisers or the retailers themselves.
Although large chains, for example, usually have the resources to invest in their own in-house tech, it can be difficult for ad buyers to reach niche audiences through smaller chains with their more nascent offerings.
Overall, though, the grocery retail media network space is becoming more sophisticated.
The appeal and potential of grocery RMNs
Grocery consumers are loyal and consistent, often shopping twice a week. Their behavior is easy to understand and doesn’t significantly fluctuate based on trends the way fashion does, for example. Grocery consumers visit a store or open a grocery chain’s app with the intention to buy.
By working with grocery chains, “we have access to that first-party data,” said Andy Howard, senior director of commerce media at Publicis-owned Mars United Commerce. “We can really hone in on who is shopping and then who is actually making the purchase.”
Retail media networks harness this data, including location, purchase behavior and demographic data, to help advertisers reach consumers and attribute the results.
RMNs put more information “into the hands of consumers so they can make educated decisions,” said Deborah Weinswig, CEO of Coresight Research, a research and advisory firm focused on retail and technology. “The consumer wins, the retailer wins and the brand wins because the brand then has more data insights around what caused a conversion.”
And by working with grocery RMNs, Weinswig said, brands can also start to answer an age-old question: “What does it take for a consumer to change their purchasing habits?”
Grocery RMNs are going the partnership route
In this rapidly evolving space, however, brands and advertisers can have very different experiences depending on their retail tech partner.
A robust grocery retail media network – think Kroger Precision Marketing, Hy-Vee RedMedia, Target’s Roundel or Albertsons Media Collective – includes various advertising options across apps, the web, out-of-home and in-store screens. These can be combined with more traditional methods, such as endcaps or retail displays.
Whereas larger chains typically offer these options to advertisers directly, other grocery chains, often smaller or more regional ones, have teamed up with vendors to support their RMNs.
Save Mart, for example, a grocery chain with locations mainly in California, works with Quad and Swiftly for its RMN.
Swiftly, which primarily works with small and medium-size chains – discount grocer Save A Lot is another example – is a retail media tech platform. And Quad, which also mostly works with small and regional chains (in addition to Save Mart, there’s Oklahoma-based Homeland Stores) focuses on in-store digital advertising assets.
In-store shopping is still an important part of grocery shopping, said Kevin Bridgewater, SVP of strategic retail solutions at Quad. “The [in-store] audience is really important to get the brands excited.”
Quad’s technology helps personalize ads across Save Mart stores in California based on factors like weather, said Bridgewater. For instance, Save Mart has locations in the Bay Area where it’s cool, misty and 50 degrees in the summer, and it also operates stores 60 miles away in Modesto where it’s 110 at the same time of year.
“The ability to promote ready-to-eat soups in the Bay Area and something that’s a little more refreshing in Modesto is critical,” Bridgewater said. “The technology we have allows us to target down to the store and even down to the aisle if necessary.”
Working together and focusing on standardization
Meanwhile, grocery chains are pooling their resources, including through initiatives like Rippl, which is a retail data co-op operated by Cardlytics-owned Bridg.
Giant Eagle, a regional chain with many locations in the Mid-Atlantic, joined Rippl last year.
Scale is something advertisers are demanding, said Joell Robinson, Giant Eagle’s senior director of retail media. And Robinson would know. She spent years in the paid media and digital advertising space, including as director of digital marketing at JPW Industries, which owns a portfolio of metalworking brands, before coming to Giant Eagle in 2022.
“Planners and buyers are asking for an easier way to buy, and coming from that background, I understand it – it’s already fragmented,” she said.
Robinson predicts more chains will band together in the future and this consolidation will make it easier for advertisers to work with smaller chains.
Even grocery chains big enough to earn a regular spot on the media plan are looking to work with other chains to standardize the space.
Kristi Argyilan, who recently left her job as SVP of retail media at Albertsons Media Collective to lead Uber’s advertising business, often heard from brands that the “complexity” of grocery retail media “is too hard for them to navigate.”
“You can imagine how much headcount a CPG could potentially have to add in order to be able to execute a unique campaign from each of us – it’s just not sustainable,” she said. “Standardization really is meant to take a lot of that extra work out.”
Albertsons is collaborating with the IAB to establish standards across grocery RMNs, and Argyilan plans to continue pushing for retail and commerce media standards in her new role at Uber.
Grocery RMNs are growing up
Grocery chains are also working to make it easier for advertisers to partner with them by embracing programmatic, personalization and generative AI to help optimize campaigns.
Another area for growth in the space is nonendemic advertising. If a shopper buys diapers, for instance, there’s a good chance they’ll also be in the market for baby products that a grocery chain doesn’t carry, like baby clothes.
There are even opportunities for grocery chains in connected TV. Argyilan believes grocery retail media has an opportunity to “actually bring some order to that channel.”
While some hurdles clearly remain with grocery RMNs, the payoff is worth it to many advertisers, especially with new opportunities on the horizon.
