In-store retail media: What is it, and where is it headed?

It’s quite appropriate for spring that the TextEdit file open on my laptop routinely corrects ‘endcap’ (the displays at the end of a supermarket aisle)  to ‘endocarp’ (the technical word for e.g. the stone of a peach, in case you’re wondering). If you don’t work in the world of retail or consumer goods, it can sometimes seem jargonistic, with its trade marketing and shopper marketing, endemic and non-endemic brands, and penchant for referencing the omnichannel.

But despite this complexity, it’s easy to understand the rise of retail media. Retailers are increasing their margins and giving brands more opportunities to influence customers in shopping mode, as well as the potential to better understand the impact of advertising.

The retail media trend is increasingly obvious for many shoppers, too, not just when they check their vouchers on their phone or look for member pricing when they shop, but when they enter their local supermarket and see shiny new screens above those endcaps (they’ve been up in my local Tesco for a number of weeks).

In November, Tesco revealed it had installed its 1,800^th in-store screen across 420 stores, up from 400 screens the previous March. Sainsbury’s announced in October it would also be expanding its network of screens, and Walmart said last summer it was putting more ads on its roughly 170,000 digital screens in stores, including on self-checkout stations, and on the screens of its televisions for sale.

Retail media in stores is perhaps tricky to define but, like wider retail media, it essentially involves some form of dynamic advertising backed by an element of customer data. It might use day parting, or even potentially personalisation, depending on which screens you’re talking about. Tesco, for example, uses customer insight from Clubcard for its in-store screen technology.

Formats for in-store retail media include endcap screens, self-scan devices such as Tesco’s Scan As You Shop handsets, ads at point of sale (e.g. on self-checkouts), screens on fridge/freezer doors, and mobile app engagement while a customer is in store, all with in-store audience measurement to ‘close the loop’.

So, what does in-store mean for retail media strategies, now and in the longer term?

In this briefing we’ll cover:

• Why it’s still early days;
• Why brands are playing catchup;
• The reach and experience of in-store screens;
• The possibility for dynamic content and targeting;
• And what differentiates in-store retail media from digital out-of-home.

It’s still ‘early days’: a fragmented market and capital expense

Despite ambitious trials and accelerating rollouts amongst major retailers, it’s still early days for this technology.

“Currently, in-store media is being driven by shopper marketing, with (traditional) static end caps being a prominent feature,” says Jaclyn Nix, EVP Brand Sales at Epsilon Retail Media.

“Although stores are beginning to explore digital options, implementation requires them to have the appropriate devices,” adds Nix, who says screens are being utilised in places such as “around the deli or at checkout,” and where “[existing] devices are already in place.”

The larger digital opportunity at the shelf is hindered by capital expenses.

 

– Jaclyn Nix, Epsilon Retail Media

There are retailers innovating. The IAB’s January report, Quantifying Retail Media In-Store Success: Measurement & Innovation, gives some examples, such as Target’s testing of screens at the end of centre aisles, which can be combined with in-store events and sampling, and which have been shown in early results to boost item-level and total brand sales for featured products.

Nevertheless, as Nix puts it, “The larger digital opportunity at the shelf is hindered by capital expenses,” and in-store creative is only “scratching the surface” of what may be possible.

This sense of the future being unevenly distributed adds to the fragmentation that is seen in retail media, where a lack of standardisation has been cited by many in the industry as the biggest challenge of 2024.

“In-store media and the utilisation of it in a more dynamic fashion – the buying, targeting and creative – is very much at the embryonic stage,” says Alex Crowe, Global VP Omnichannel at media platform Criteo. “So while brands are trialling different use cases by channel or retailer, there is a fragmented market that means brands aren’t currently driving this at scale and optimising across multiple partners.”

It’s worth pointing out, of course, that the end point here is not the digitisation of all in-store media. After all, stores should be places where shoppers are happy to be. “One of the primary realisations is that in-store retail media is not a replacement for traditional marketing routes but rather a complementary approach to enhancing the current customer experience,” says Mark Leith, Director of Delivery – eCommerce, Omnicom Media Group UK.

“Brands understand that while digital displays and personalised content offer new opportunities for engagement, traditional methods like endcaps still hold value due to their proven track record in driving sales and capturing shopper attention,” says Leith. He adds that there is no need for a complete overhaul of established strategies, rather retail media is “a way to further connect” and “bridge the gap between online and offline channels.”

Brands are ‘playing catchup’ and need to align internally on budgets

“Looking ahead, we are likely to move to a world of multiple customer touch points with a hybrid of old trade-related retail media and more dynamic in-store media,” says Crowe, highlighting the evolution of in-store from “printed, highly fragmented assets with various naming conventions, sizing, fulfilment routes, targeting and return on ad spend measurement,” to screens, audio and apps.

“What’s crucial here is the ability to house all of this media in one place,” adds Crowe. “This provides the benefit of visibility and control, with advertisers able to book in accordance with any desired retailer controls, like what can be advertised where and what is in stock, solving for different paths and sign off protocols.”

This point about control goes to a wider theme, that of CPG/FMCG brands adjusting to a relatively new type of media targeting (fuelled by retailer data), which can potentially now jump between online and off-, as well as from retailer ecommerce sites to the wider web. This has led to overlapping remits in some internal brand teams, such as shopper, media, digital and ecommerce teams, which are all ultimately aiming to impact the bottom line. As interviewees in Econsultancy’s Retail Media Best Practice Guide explain, the ownership and oversight of retail media is often dispersed across a variety of functions, and there’s a need for cross-functional teams to assess the impact of advertising throughout the shopper journey.

…non-endemic brands are sometimes participating in [digital media in stores] more than the endemic because they see it as an opportunity for outreach.

 

– Jaclyn Nix, Epsilon

“Brands are still playing catch up in this stage,” says Epsilon’s Jaclyn Nix. “They are relying on trade funding or shopper marketing for those end caps. Market feedback indicates that brands need to align internally on funding sources.”

Nix adds that, “when there are digital opportunities, non-endemic brands (i.e. brands that don’t sell their product in the store) are sometimes participating in those more than the endemic because they see it as an opportunity for outreach.” The industry has traditionally seen screens, often outside supermarkets, as part of digital out-of-home networks, sought out by brand advertisers, and that is changing as retailers bring them into their more targeted retail media offering.

Stores offer unparalleled reach (but retailers must create great experiences)

Andrew Lipsman, independent analyst and consultant in retail media, has been bullish about the effectiveness and reach of in-store media. “As brands continue to struggle with linear TV’s decline, they should commit to investing 5% of existing linear TV budgets in in-store media by 2025,” Lipsman and co-author Keith Bryan write in an article for Adweek titled ‘Physical Retail Is the New TV’.

The authors note that these two media channels are not interchangeable and the context in stores “isn’t conducive to extended storytelling” (nobody is stood at an endcap watching a 30-second ad with their friends during half time of a sporting event), but Lipsman and others make the case that in-store retail media shouldn’t be presented solely as performance marketing just because it sits near to a checkout. It has a role in brand building, too.

Marketers will be familiar with the sometimes byzantine debates about brand vs. performance. Epsilon’s Jaclyn Nix compares in-store reach to search marketing online, as it “operates at a low funnel level” and can “drive impulse purchases,” as well as “influence decisions based on price.” Nix adds that, though these are important touchpoints, “it’s also important to reach that consumer even before they reach the store because that’s when you’re able to influence the shopping list.”

Marketers will be familiar with the sometimes byzantine debates about brand vs. performance.

Whatever the reach or precise use case of in-store retail media, it’s true to say that some shoppers aren’t always keen on more ads. Users on X (formerly Twitter) have complained about self-checkout ads at Walmart, for example, as well as screens on fridge doors at Walgreens. Whilst it’s not hard to find complaints about any form of advertising on social networks, it’s also true that retailers are conscious about not going too far, too fast with new dynamic ads in stores, given the customer experience is carefully calibrated to appeal to shoppers.

Research by Grocery TV late last year surveyed more than 1,000 consumers and found that 87% were accepting or positive towards in-store advertising, putting it at the top of the tree, above channels such as linear TV, audio and display. In-store also topped the chart for getting shoppers to take notice, with nearly 50% of respondents saying they were very likely or likely to pay attention to in-store advertising. As in-store ads and ad formats proliferate, this sentiment will be one to keep an eye on.

Dynamic content and personalisation – retailers will ‘lean in’ if it impacts the bottom line

Perhaps the most intriguing aspect to in-store retail media is the level of sophistication it might reach with regards to targeting and measurement. The grocery sector has seen its fair share of high tech trials, with the apotheosis arguably Amazon Fresh and its Just Walk Out technology. Some Fresh stores were closed last year in the UK, and others were opened with the inclusion of manned checkouts, with the company talking about the need to be more clearly differentiated. There are still many shoppers that, whilst they don’t want to face long queues, prefer to check out with a human cashier, rather than at a self-checkout.

So, the adjacent question for in-store retail media is, how connected, real-time, even personalised can its various formats be, without feeling creepy or just plain annoying?

The IAB’s aforementioned report on innovation includes reference to the following tech (not an exhaustive list):

• Visual sensors gathering anonymized data on foot traffic, to better understand ad positions and also to trigger ads when customers approach.
• Passive Wi-Fi, too, to measure circulation.
• Shopping basket and cart sensors, to understand exposure to ads.
• Screens with embedded sensors that can alter the experience based on the level of engagement from the customer.
• Audio programming that uses location-based audience profiles, product availability and venue features.
• Precise, real-time customer segments based on anonymized attributes (age, gender, group) and contextual attributes, such as in-store proximity.
• Dynamic adaptation of content based on real-time data.

There are retailers experimenting with some of this tech, but it’s hard not to go through the list and note the potential for either privacy gripes or just plain error. Digital out of home (DOOH) has often promised similar types of innovation (though retail media providers are quick to point out the differences with DOOH – see the next section).

Take a deep dive into retail media with Econsultancy’s new learning plan, ‘Optimising the Retail Media Opportunity’

I asked Epsilon’s Jaclyn Nix about whether retailers are in a position to bring this many moving parts into in-store media. “Retailers typically prefer streamlined operations,” said Nix. “However, they are motivated by the additional revenue dollars and if these components are the way to achieve those, then retailers will lean in.”

“It’s also up to us as a market to identify what is needed and how to streamline processes to drive connected outcomes. Brands are looking for a simpler way forward and it’s our turn to make that happen,” Nix adds.

Criteo’s Alex Crowe expands on a similar theme. “The challenge is, in-store is a ‘one-to-many’ environment where the shopper is often not known until they reach the checkout,” he says. “Retailers want to drive more personalised and relevant messages to their customers, which in turn will support customers in building bigger baskets. In the pursuit of that goal, trying to better understand the in-store shopper through sensors and analysis provides important insights.”

The challenge is, in-store is a ‘one-to-many’ environment where the shopper is often not known until they reach the checkout…

 

–Alex Crowe, Criteo

And what of this vision of audience addressability and personalisation (depending on the type of screen)? Well, Tesco rolled out dynamic Scan As You Shop handset ad placements late last year (customers connect their Clubcard details). And Crowe says that, “Programmatic bidding has driven more of a desire to unlock demand from new sources, so retailers are investing in retail media as they seek to drive net new investment at high margin to support their broader business goals.”

There will of course be lots of wrinkles to work out, but there are companies selling ‘smart’ in-store retail media solutions. Epsilon’s Nix cautions that retailers “need to consider the context” when going as far as personalised ads and points to the potential friction in-store if “individuals don’t receive the same opportunity”.

“Mobile devices are the most realistic vehicle to deliver personalised messaging, but even that is developing,” adds Nix. “There is such a limited window of time when someone is shopping in-store vs. all the other time/activities during the day.” Indeed, one can imagine (certainly in stores with poor signal) the right ad arriving just as shoppers hit the exit. Nix says brands need to get the balance right, catching customers in store and at home.

In-store sets out to be more than DOOH

Treating in-store retail media like DOOH is a mistake, according to Iman Nahvi, Co-Founder and CEO at in-store retail media firm Advertima (founded 2021 and which has developed 3D computer vision and machine learning to turn in-store shoppers into retail media audiences).

In a blog post, Nahvi writes about the goal of providing “a more conclusive link between ad spend, ad exposure, in-store shopper, and sales,” and describes the “real value” of in-store retail media lying in the combination of “historical retailer data with real-time data from within the store”. And if this is taken to be a given, it puts in-store retail media at quite a remove from the awareness-generating role held by DOOH.

Nahvi describes stores as a “1-to-some” environment that “not only allows but even demands a new, more targeted approach.”

Criteo’s Alex Crowe says, “The first-party cues and data points that will be used to deliver [targeting] will likely vary by retailer, vertical and market, but will ultimately drive more relevant customer communication; be that the product advertised, the call-to-action or other creative elements.”

There will be some who are a little sceptical about the potential for creative to be altered dynamically in real time on a person-by-person basis. The example Crowe gives, for example, is a sunglasses ad with a background that changes, according to whether I have been planning a ski trip or a beach holiday. Still, this type of hypothetical is probably a distraction from the broader business case. Nix and Crowe agree on the fundamental instincts behind in-store retail media. “In-store opportunities can be additive to an advertiser’s ability to meet multiple goals,” says Crowe.

Nix says brands are “increasingly leaning in to closed-loop attribution, aiming to transform shopper marketing… into a strategy that drives ROI.” Though she describes the opportunity as “a work in progress,” Nix adds that, “we view the store as the next frontier for retailer media as the digital presence will increase with more screens and digital touch points.”

It’s an intriguing time for the supermarket, let’s see what shoppers think.