Oliver Butterworth, Senior Retail Analyst – USA at IGD (Institute of Grocery Distribution), a non-profit focused on insights across grocery retail, spoke to RMA Editor Tyrone Stewart about how the retail media market differs in the US and UK, and the size of the overall opportunity for grocery stores.
How do the US and UK markets differ?
What the US does really well is the online side of things. Obviously, you’ve got major players like Amazon, Walmart that have been doing it for a long time, and doing it really well. But where the US has been quite slow to adapt has been the in-store side of things. And the UK is quite advanced for that. There are lots of screens going into store. We’re seeing a lot more app-related stuff. Lots of stuff around loyalty. So, I think the US can learn from what’s happening in Europe, and particularly the UK, to be honest.
Some retailers are doing well, and some aren’t. So, when you go into a store and you’re presented with 20 screens, it can be a bit daunting for the customers, a sensory overload. But the retailers that are doing it right have a couple of screens that are leading to purchases. That’s what the US could learn.
Walmart have started doing it, and they’re doing it quite sensibly. What they’ll do is not be focused on one specific brand. So, if you go into the pet category, they’ll have a screen, but they’ll have four or five different products, from different brands, rather than just fixating on one brand. That’s quite interesting. And then there are QR codes that drive you online.
When it comes to what the US is doing well that the UK could be doing better, Walmart is doing so much online like branded shop-in-shops on their website, and even down to the way they use sidebars. So, the UK could learn from the online side, the US could learn from the in-store side.
Walmart is seemingly the exception, already learning from the UK approach, why does what they’re doing in-store work?
It’s done in a good way, because all of the products are related. So, it might be a pet food, then a pet toy. It’s done in a stylish way, without it looking too much. And they only do it in emotive categories like pet and baby, where you’re more responsive. It might be a new food that got tons of vitamins or something good for your dog, you’re more likely to buy it if you’re educated a bit more on the screen. And then the screen changes, and they’ll have a QR code saying, “are you aware that Walmart has a vet service? Scan this code”. So, it’s not just promoting the brand, it’s promoting their wider business.
They had a bit of an advantage, because other countries, like the UK, are more advanced in in-store retail media. Walmart could learn from our mistakes. It’s been ticking along for a few years in the UK, so Walmart can just jump in where we are now.
With that in mind, where do you see in-store retail media heading?
There’s a big opportunity within loyalty schemes to have geo-located offers. So, if you’ve got the Tesco app, and you go into the Tesco store, it knows what you buy. It knows you like biscuits, so it’s a no-brainer to give you personalised offers.
The other one – but I’m not sure how much it’s going to take-off – is connected TV. A lot of businesses like Roku, and even YouTube, with shoppable ads. I think that’s going to grow, but it’s difficult to know the size of the opportunity. Because, when you go on Netflix, if you see an advert for trainers, are you likely to go to that when all you want to do is watch a TV programme?
But I think those are the two areas I’m interested in the most really. Definitely the one around getting personalised offers while you’re in the actual physical store.
How would you sum up your thoughts on retail media?
It’s got huge potential but, at the moment, it’s a little fragmented. A lot of the challenges are around measurement. All these brands are investing loads in retail media, but they can’t necessarily say that it’s led to that uplift in sales. In some cases they can, but they can’t always measure the return on investment. So, I think that needs a bit of a fine tune but, obviously, there’s so much opportunity. The size of the opportunity we’re talking about is billions, so it’s absolutely massive.
If retailers are going to sell more, if they want to grow their online business, which is unprofitable, because the delivery costs so much, they need a way to offset those costs and retail media is a big way to do that.
