Craig Smith, UK Country Manager at ecommerce technology platform, Scayle discusses why Connected Commerce is key to building your Retail Media strategy:
Retail media spend in the UK is projected to reach £6.6 billion in 2025, potentially even surpassing TV advertising by the end of the year.
It’s not hard to see why retail media is experiencing a surge in popularity: by monetising their physical and digital spaces, from in-store advertising and digital campaigns to loyalty programmes, retailers can enable highly targeted ads for brands and create a new stream of revenue for themselves, with on-site margins reaching up to 80%.
But to take advantage of Retail Media Networks (RMNs), retailers need an effective connected commerce strategy. This means cultivating seamless shopping experiences across all channels: digital, physical and hybrid.
The foundation: connected commerce
Connected commerce is a crucial foundation for retailers looking to take advantage of RMNs. Firstly, connected commerce allows retailers to generate richer first-party data that spans the entire customer journey, from online to in-store. For instance, a shopper’s online browsing history can inform in-store product recommendations, while their in-store purchase history can influence digital marketing campaigns and activations.
Connected commerce also creates more touchpoints for ads, whether this is a personalised email, or a pop-up experience or digital screen in store.
Ultimately, connected commerce is also just a crucial hygiene factor for retailers today. Consumers expect personalised, frictionless interactions that cater to their unique preferences, whether they are browsing online, shopping in-store, or engaging with a brand through social media.
The strategy in action
One retailer nailing their retail media strategy is UK luxury brand Selfridges. The Selfridges Media Network draws on the retailer’s premium reputation to create engaging campaigns that deliver across all channels. In store, the brand hosts ‘atrium takeovers’, where a brand can transform the centre of the department store with a pop-up; and across the store, brands can rent ad space on digital screens. Online, the brand takes advantage of social media collaborations, as well as personalised emails that include targeted product recommendations based on customers’ shopping history and preferences. The department store’s website also blends editorial and commercial content, promoting sponsored products from emerging designers.
Retail media isn’t solely about giving ad space to other brands: it can also give retailers the opportunity to upsell their own products wherever they’re interacting with customers. A strong retail media approach gives retailers two new avenues for income, both through ad revenue and the opportunity to upsell their own products.
The business model
Because connected commerce encourages higher engagement across all touchpoints, retailers stand to gain more data about customers’ real-time behaviour, allowing them to analyse shopping patterns and develop customer profiles. This first-party data is the lifeblood of retail media.
With more data, brands know their ads will be precisely targeted, reaching the right customers at the right time and through the right channels. For example, a beauty brand advertising on a retailer’s website can serve different ads to a shopper who frequently buys skincare products to another that only browses makeup. High levels of personalisation result in higher click-through rates and better conversion rates. Because ads are more effective, advertisers are often willing to pay higher CPMs.
Putting a Retail Media Network into action
Retailers looking to take advantage of the retail media opportunity must begin by developing a strong first-party data strategy. This means collecting as much first-party data as possible, as well as building effective systems to manage this data. Retailers might consider putting in place loyalty programmes to encourage customers to share their data, like UK health and beauty brand Boots, which uses Advantage Card data to create targeted ads and personalised offers.
Customer experience is king, even when experimenting with new digital strategies. In practice, this means ensuring in-store and online ads feel authentic and are harmonious with your brand’s offering and product line. Retailers should be selective when it comes to choosing brands to partner up with: by choosing complementary brands, retailers can create the impression they are offering the customer added value through personalised suggestions, rather than pestering them with obtrusive ads.
Ultimately, the bigger the brand, and the more channels it is operating across, the more complex and costly it can be to put a retail media strategy in place. While brands with highly customised setups will often see the best results from a retail media network, these environments also create more complexity and expense. It’s important for retailers to choose a partner that can make the setup as quick and painfree as possible, avoiding years of development and high costs.