On the 2nd of October, the who’s who of Australian retail media descended on Surry Hills in Sydney for the Remade Retail Media Conference to discuss the emerging industry. Retailers and brand manufacturers alike are grappling with how to orient around the rapid shift occurring in market and what was abundantly clear is that most brands on both sides of the coin are experiencing a lot of growing pains.
In this article, we explore the key themes of the day and what retailers and brands can take away from it.
KEY LEARNING 1: TRUST IS A BIG CHALLENGE FOR RETAILERS TO SOLVE TO THRIVE IN THE RETAIL MEDIA AGE
Whilst retail media is a new industry, retailing is not.
Both Coles and Woolies have been at it for over 100 years, David Jones has been at it for nearly 200 years, and over those decades, much opinion has been formed about how both sides operate.
Negotiation is a critical part of the supplier and retailer relationship – it is not a one-and-done scenario with brands and retailers regularly engaging on new terms and joint business plans. During those negotiations, each party is looking to maximise value for their organisation, which inherently means that certain information may not be disclosed or highlighted if it provides the other party with a leg up within the negotiation process.
So, what has this got to do with retail media? Well, everything.
One of the recurring themes of the day was the perception that retailers are holding back data and insights that brands need to make informed decisions about their retail media performance.
For many retailers, the stark reality is that the networks do not yet have the maturity or sophistication in place to surface what is needed and it is a work in progress. In the absence of having all of the insights and reporting at their fingertips for brands, retailers need to consider how to build trust through a transparent and open approach to communication through regular forums and showcases – communicating what is coming and co-creating with brands in the process to manage expectations better. By building greater trust, networks have a greater chance of securing a larger slice of the spend pie overtime.
The negotiating power between retailers and brand manufacturers has always tipped in favour of the retailer. The brand manufacturer needs what the retailer has.
KEY LEARNING 2: RETAILERS ARE ORIENTING MEASUREMENT FRAMEWORKS AROUND OVERALL CAMPAIGN PERFORMANCE VS INDIVIDUAL CHANNELS
We all know that to deliver a successful campaign in market, we need an integrated campaign strategy that leverages the right mix of channels to deliver the desired outcome based on the audience we are targeting. And this is precisely why retail media networks are orienting their measurement and reporting approach around a campaign, rather than reporting at a channel-by-channel level. However, the problem is two-fold for retailers.
The first is that the marketing industry has always measured individual channels alongside of overarching performance, and I am not convinced the retail media industry can re-wire how marketing and brand teams work.
The second issue is that without a robust attribution model in place, it is impossible for a brand to understand which channels are over or underperforming to optimise performance. As many networks still lack maturity in the reporting and measurement space, brands don’t have the attribution data at their disposal which means they will time and time again come back to wanting to see individual channel performance data.
KEY LEARNING 3: WE MAY BE ABLE TO STANDARDISE CORE REPORTING METRICS BUT ATTRIBUTION APPROACHES WILL ALWAYS BE DIFFERENT
As more networks spring up, the challenge for brands is their ability to compare performance across networks and make informed future investment decisions. Standardisation of metrics may be possible, but it will require leadership from the largest networks to collaborate with their rivals for the betterment of the industry. But what brand manufacturers need to understand is that when it comes to attribution models, there will never be standardisation as each network will have their own proprietary algorithms and models to determine attribution.
KEY LEARNING 4: RETAILERS MUST KEEP ONE EYE OPEN ON EMERGING CHANNELS & THEIR RETAIL MEDIA NETWORKS
Globally $1tn is now spent on Online Food Delivery platforms, 60% is now on grocery and 40% on food and players like Uber Eats command a big share of the pie. Over 10m Australians now shop on the Uber and UberEats platforms and 69 per cent of that audience are millennials and genZ's. Amazon is now the leading marketplace in Australia, having tipped eBay off its podium earlier this year, boasting over 5m+ Amazon prime memberships and it is seeing double-digit revenue growth YOY from its marketplace.
For retailers, these not-so-emerging channels are a force to be reckoned with in the retail media space. Amazon has by far the most mature and established retail media network in the US and Uber as another digital pureplay has a full 360-degree view of all of its customer's behaviour which is ripe for monetisation through retail media. Uber’s advertising business has smashed its $US1 billion ($AU1.54 billion) revenue target six months ahead of schedule with the company’s international head of sales, Paul Wright, hailing the Australian and New Zealand markets as “critical” in its journey thus far.
This makes closed-loop reporting even more critical for major retailers vying to protect their share of retail media spend from global rivals.
KEY LEARNING 5: BRAND MANUFACTURERS CAN’T GET OUT OF THEIR OWN WAY, AND THOSE THAT DO WILL WIN
Many organisational structures within CPGs and FMCGs were built to serve a very different time. With shopper marketing teams, marketing, eCommerce, sales and more in place, teams are struggling to effectively execute on retail media and it is time that brands start thinking about how to organise themselves in a way that will deliver organisational agility and enable effective investment decisions in retail media. What’s more, brands need to build a common language and an aligned strategy and goals that they are all working towards achieving in order to better leverage the opportunities that retail media affords.
KEY LEARNING 6: FOUNDATIONS FIRST THEN RETAIL MEDIA
Whilst retail media is easy to turn on and off and is one of the more glamorous parts of digital shelf management, the conference reinforced that brilliant basics must still be the priority. Brand manufacturers must invest in getting the core right – availability, delivering great experience through the PDP and more. Retail media is not the digital shelf strategy, it is part of it, don’t confuse the two.
Arktic Fox partners with an array of brands to effectively manage the digital shelf and to manage retail media. Find out more about how we can help.