David Fieldhouse, head of commerce, GroupM, gives his thoughts on how acceleration of retail media is a boost to UK commerce, and can bolster its advertising prowess

The well-documented rise of retail media continues to accelerate. All charts tracking the sector’s ad spend point in the same direction - up, up, and up. Our latest This Year, Next Year data shows UK retail media and commerce growing 17.7% year-on-year, making it the second fastest growing channel after streaming in the UK. Some retailers are also seeing more than 50% growth in ad-spend, unheard of across the rest of the industry.

Unlike relatively new ad opportunities on social media platforms, retail media is an established component of the marketing landscape. Retailers have long sold ‘media’ to their suppliers as part of trade negotiations, with these types of placements generally static, in-store, and analogue in nature. 

The scale of this industry is vast; billions of pounds are contracted between retailers and brands each year. Yet it’s largely been overlooked by the wider advertising community, with brand and trade budgets and the accompanying strategies traditionally siloed. However, this dynamic is changing fast. The digitisation and proliferation of retail media channels, the increasing importance of e-commerce, and the revenue margin it offers retailers all mean the tectonic plates will continue to shift. Now, the industry must adapt. 

Walmart: a new media giant 

Will retailers become media owners? Not entirely - at least not in the same way we define pure-play publishers. The complex retail business of supply chains, stores, and suppliers will always centre around serving retailers’ customers in whichever sector they operate. However, if retail media divisions begin ‘acting’ like media owners, they can unlock significant opportunities.

A good example is Walmart, who’ve taken their lead from Amazon’s giant full-funnel offering and created advertising platform Walmart Connect. The supermarket’s ad business recently grew 27% to USD$4.4bn, putting it close to Snapchat in terms of ad revenue and amongst the top 20 media owners globally. The keys to this success? Walmart’s on-site technology, approach to data and digitised stores. Its collaborative approach to tools and agency-friendly agreements have also driven significant growth. 

Retailers worldwide are now seeking to emulate Walmart’s success in the retail media space. In the UK, we’re seeing more joined-up retailer offerings that combine digital in-store, online, and data to drive incremental sales for clients. Tesco is another good example with a full, connected offering which is landing well with agencies. Many remain at different stages of maturity however, with some only partly engaging with the media-buying community so far.

Retailers still need to adapt to the cultural and structural differences of the advertising world. Agencies find ‘walled gardens’ and a lack of ad industry measurement standardisation tough to navigate, they also crave the self-service workflow tools that already exist within their business. Retailers must also compete with the likes of Google, Meta, and broadcast TV for client budgets. Fortunately, those that embrace the opportunity by speaking the same language as ad buyers can earn an outsized share of the market.

The winning triumvirate: retailers, agencies, and brands 

As retailers digitise their offerings through new tools, programmatic in-store opportunities and data collaborations, agencies will play a key role in the growth of any retail media network. They bring scale and expertise in programmatic advertising and data analytics, skills not traditionally found in retail trade environments. Moreover, both retailers and agencies already share long-standing relationships with brands, presenting valuable opportunities for deeper collaboration.

At GroupM, we have seen significant success for our clients when brand and trade budgets align. A recent campaign we worked on for a global FMCG brand delivered excellent results across the entire funnel and utilised all of the available retail media opportunities - on-site, off-site data, and in-store executions leveraged seamlessly on one plan. This produced outsized, real-world business results for the client and crucially drove incremental sales.  

While legacy processes in both retail and advertising cannot be overhauled overnight, business planning conversations between retailers, agencies, and brands will soon converge to deliver huge growth for all three players. Though we’re still early in the evolution of retail media, the groundwork has been laid in many cases. Now, the ambition on all sides is to scale, and many retailers will be investing heavily in advertising partnerships and technology over the next three years. In the UK, GroupM has already inked wide-ranging deals with partners like Tesco, with more soon to follow. Retailers who act now to break down siloes and embrace new opportunities will lead the next era of commerce for many years to come.