Retail Media Networks: The Income Stream That Could Give Stores A New Lease On Life
Store portfolios around the world, but especially in the U.S., stand to gain from the rapidly developing retail media network industry, which executives say offers the opportunity to use physical stores as targeted advertising bases for consumer brands and campaigns.
If the initiatives prove successful, it would create a new revenue stream for the stores outside of pure product sales, with some of the top American retailers believing that the in-store opportunity is far bigger than online advertising.
Amid the hype around artificial intelligence at the National Retail Federation’s Big Show in New York in January, the likes of Walmart, 7-Eleven, Walgreens and Kroger lined up to explain how they are already monetizing their stores through brand collaborations.
RMNs started out predominantly as the predictive advertisements that appear on websites, with Amazon Ads the giant in the market. However, RMNs in the form of the use of targeted in-store digital promotions, campaigns and highly focused marketing at the point of purchase have surged in the past two years.
Convenience chain 7-Eleven debuted its RMN, Gulp Media, in October 2022 based on insights from its proprietary The Brainfreeze Collective of 250,000 loyalty members, enabling it to carry out quantitative and qualitative research at scale ahead of launch. The retailer then tests those initiatives at so-called lab stores, which are operational stores testing real products with customers.
“Gulp Media is the activation part, to leverage 7-Eleven’s 90 million loyalty members, providing advertisers with opportunities to reach consumers all along the funnel and link that through to sales via our analytics platform,” 7-Eleven Chief Marketing and Sustainability Officer Marissa Jarratt said. “Our most loyal shoppers visit more than once a day. That's a high degree of engagement and commitment to the brand.”
The retailer is also planning a full rollout of in-store radio, up from its current 2,000-location portfolio.
“Gulp Radio will become the biggest radio station in the U.S. Bringing this into the stores will unleash a new level of growth for us and our partners,” Jarratt said.
Radio will also play a key part in the strategy of Walmart, which has arguably the most developed RMN. Having pivoted heavily toward technology over the past few years, the company says its network reach is larger than any national broadcast channel.
“We are seeing money flowing into in-store advertising, video and audio via in-store radio, also deli and bakery screens, plus ads on self-checkouts,” Walmart Connect Senior Vice President of Sales Ryan Mayward said. “Touchpoints throughout the store help to shape the ad experience for the customer and how each touchpoint drives performance.”
Another retailer with a developed RMN is grocery chain Kroger, and Chief Information Officer Yael Cosset said the Kroger Precision Network represents an important model for the retailer.
“The opportunity is there to take advantage of some of the assets, which are relevant for the consumer, good for the brands and generate better returns on engagement,” he said. “We create better-quality experiences for the customer and a better advertising platform, monetizing the data.”
Meanwhile, Walgreens Advertising Group Head of Revenue Jonathan Lustig said that with around 9,000 stores, the drugstore's physical footprint has become a valuable asset for the company.
“We took a unique route with off-site via loyalty programs with 100 million users, built on the web and then leveraged through in-store assets to leverage both physical and digital,” he said. “Data has allowed us to build depth and breadth, additive to the consumer experience. There is no one way to interact with the customer.”
Lustig said that Walgreens views its retail media network as another channel to engage with customers and said that the retailer had tested myriad alternative in-store models, looking at ways to include media networks as a core part of the store.
