Retail Media Networks Drive Your Growth and Unlock New Revenue Streams
Executive Summary
HIGHLIGHTS
How can you benefit from a Retail Media Network (RMN)? RMNs enable grocery retailers to drive sales and increased foot traffic through personalized digital marketing communications to better connect with shoppers across digital properties while also tapping into new revenue opportunities based on Consumer-Packaged Goods (CPG) companies’ advertising spend. Because RMNs’ marketing messaging can be personalized based on in-store purchases and digital behavior, these communications can better resonate with consumers compared to traditional marketing messaging.
Potential Impact: RMNs represent both a brand-new revenue opportunity, as well as an opportunity to drive incremental spend from existing customers. The total U.S. RMN market size is estimated to reach $55B in 20241 as CPG companies continue to accelerate investment in digital advertising. Meanwhile, one in three shoppers stated they would shop more frequently at a grocery store offering personalized promotions and content, and one in four would increase their basket size.2
Case Study: By implementing an RMN, St. Louis-based chain Dierbergs was able to expand their access to vendor funding, digitally engage their shoppers, and heighten their customer experience both in-store and online.
You can have a seat at the table.
While chain retail giants have a head start with RMNs, independent grocers and retail chains can also capture their share of these margin-rich revenue opportunities.
INTRODUCTION
In today’s grocery environment, can you reach your shoppers in a way that feels both personal and relevant to their needs?
It’s been a constant struggle for independent grocers to find a way to unlock the power of technology and data to better reach customers online with offers that resonate with them and take advantage of the billions of dollars that are spent on digital advertising by CPGs.
And while this digital advertising realm can feel daunting, you shouldn’t be intimidated into sitting on the sidelines. RMNs are becoming game-changers in our industry. They offer a new channel for revenue generation and consumer engagement that integrates digital advertising across the shopping experience. These networks are part of what we’re seeing in the evolution of digital, data-driven marketing strategies. When done correctly, RMNs enable retailers to realize cost savings in their own marketing spend and generate a high-margin revenue stream.
While you can still use mass marketing channels, RMNs help you narrow messaging to each person, shaping their behavior before and during the purchase process. It’s leading to increased foot traffic, larger basket sizes, and stronger customer loyalty—and represents a huge revenue opportunity by taking advantage of CPGs’ digital advertising spend.
It’s what we saw with regional grocers like Dierbergs, the St. Louis-based grocery chain who found a new pathway through an RMN to connect their consumers with the brands they love most, enrich the shopping experience, and build customer loyalty.
This paper will show you how RMNs can benefit your bottom line and your marketing efforts, regardless of the size of your business. You don’t have to be a “big player” to harness retail media, differentiate yourself, increase revenue, or better reach your customers.
The Rapid Rise of Retail Media Networks
If you search for a smart watch on a tech retailer’s website, you’re likely to see “sponsored” or “featured” products towards the top of the page.
These are paid advertisements by brand partners driven by those retailers’ RMNs, which enables retailers to display personalized advertisements, offers, and promotions directly to shoppers as they browse online (either directly on a retailer’s website or on a third-party website).
Amazon created the first retail media network with its Amazon Ads Platform in 2012.3 Since then RMNs have stimulated the digital commerce space, creating a $55 billion dollar industry, with future double-digit growth potential.4
It’s part of a rapidly growing trend of combining retailer data, digital advertising platforms, online consumer behavior, and CPGs’ digital advertising spend. Used together, retailers are enhancing consumer engagement before and during the shopping experience.
And it’s just a small part of the RMN’s ability to connect with consumers based on what they are buying.3
3 Nielsen, “What are Retail Media Networks, and Why is Everybody Talking About Them?,” June 2024
4 Cleveland Research Company, eMarketer H1 2024 RMN Forecast, SBI Estimate for SAM
ALIGNMENT WITH CONSUMER & INDUSTRY TRENDS
Many retailers in other sectors like healthcare and consumer goods are successfully using RMNs. Now, we are seeing an increase in use for grocery retailers. The frequent purchase patterns in grocery are ideal for the personalized, data-driven advertising that RMNs offer. And it’s becoming popular and necessary for retailers. As noted by Grocery Dive5:
“Entering the retail media space has practically become a requirement for grocers to stay relevant with shoppers, competitive among retailers and connected with brand partners.”
We see this happening within the grocery industry for a few reasons:
“Omnichannel” refers to a multi-channel approach to sales and customer service that aims to provide customers with a seamless experience, whether they’re shopping online from a desktop or mobile device, or in a brickand-mortar store.
The goal is to integrate these channels for a unified and convenient shopping experience.
The increasing shift toward digitization and an omnichannel shopping experience. Our consumer research found that 76% of grocery shoppers utilize one or more online tools (social media, store’s site/app or online ads) to learn about new grocery products or promotions.6 In response, grocers are ramping up their digital presence with e-commerce platforms, mobile apps, and digital loyalty programs. This then provides CPG companies with great motivation to invest in retailers’ RMNs, as they represent new advertising platforms focused on high-quality digital advertising impressions.
An increase in data-driven marketing. With access to vast amounts of consumer data, grocers can now create highly personalized shopping experiences. With your average grocery store containing more than 35,000 SKUs, consumers welcome the help in highlighting relevant savings and guiding them to discover new products that they are likely to enjoy.
Consumer behavior is driving incremental sales. Our research showed that two-thirds of consumers find personalized grocery messaging useful. And one in three consumers said they would shop more frequently at a grocery store after seeing a relevant digital ad, and one in four would increase their basket size.6 As one shopper told us:
“Sometimes I forget what to add to my grocery list and these recommendations remind me to add them onto the list. If I see a product that I haven’t tried but looks interesting, it helps me find new favorite products.” -Female shopper, 22
And it doesn’t matter your size or location; this shift in marketing will benefit your bottom line by allowing you to tap into CPGs’ advertising dollars.
5 Grocery Dive, “How grocers have integrated retail media so far in 2023,” August, 2023
6 UNFI Primary Consumer Research, September 2024
How RMNs Work and How They Can Help You
Incrementa l Revenue
Cust omer Data
Per sonalized Me ss aging
RMNs are a significant opportunity to differentiate yourself in a competitive market.
Ad vert ising Spend
This graphic illustrates major parties, components, and benefit of an RMN.
The concept is simple: deliver personalized messages at the right time so that consumers are prompted to purchase more products that are relevant to them. With the consumer data at hand, retailers can activate the RMN to run personalized messaging based on the shoppers’ buying habits. During any point of purchase, such as when shoppers are choosing items, browsing online, or are about to check out, these ads alert them to a possible sale on an item they may want to purchase.
With that prompting, the consumer is led to purchase those items or go to the relevant section of the grocery store to have another look at what they may be missing.
By integrating digital ads into shopping platforms, you can create a more engaging and personalized experience for your customers. This not only drives sales but also strengthens the overall brand-customer relationship, which is a major part of independent grocers’ unique value propositions.
Most RMNs will allow you to do the following:
Offer you new growth opportunities. Driving new sales through more engaging shopper experiences across digital properties becomes even more important as traditional profit margins in our industry continue to face pressure. By displaying personalized ads that are sponsored by CPGs, you can monetize your digital real estate in ways that were previously unavailable. CPGs invest in RMNs because of the ability to deliver high-quality, personalized messaging, and this win/win scenario allows you to build a new revenue stream.
Activate on-site and off-site personalized advertising. Across your website, mobile app, and across third party websites, RMNs can reach shoppers with ads featuring products and their price points that directly appeal to a shopper based on past purchases. These ads can be tailored to various stages of the buying journey. These abilities allow you to “reach audiences with finely tuned messages at a time when they’re likely to be more receptive to those messages.7”
7 Nielsen, “What are Retail Media Networks, and Why is Everybody Talking About Them?,” June 2024
Increase your Return on Investment (ROI) or Return on Ad Spend (ROAS). RMNs can use closed feedback loop reporting to understand which promotions or items are purchased. This creates a direct line between advertising dollars and sales dollars, and helps you (and your RMN’s CPG partners) better see the return on marketing communications spend.
What’s more exciting is what may be in the future.
As RMNs become more ingrained in the shopper experience, industry leaders see brick-and-mortar integration and Artificial Intelligence (AI) application:
• While RMNs are currently a primarily online digital tool, tailored in-store digital touchpoints are a major opportunity. These could include audio, video, or other interactive experiences closer to the physical point of purchase for many shoppers. These touchpoints would allow for enhanced reach to those who still primarily shop brick-and-mortar, as well as an enhanced in-store experience for all shoppers.
• AI integration in RMNs could include ultra-personalized ad creative or suggest strategies for campaign optimization.
• “The future of retail media is evolving into a more inclusive and interconnected landscape. This evolution encompasses not only large retail chains, but also sees independent and regional retailers banding together into powerful networks.” - Sean Turner, Co-Founder and Chief Innovation Officer, Swiftly.
A SOLUTION TO SCALE
While keeping up with the fast-moving world of RMN can seem like a challenge, the technology to launch a retail media network is straightforward. You generally just need two components:
1. Shopper purchase data (email, phone number, loyalty number, etc.).
2. A digital customer experience (e.g., a website or e-commerce platform).
And most grocers like yourself have these. So what’s the biggest obstacle to harnessing the full benefits of a RMN? Scale.
For RMNs to be effective, you need to have scale. As you may recall, Amazon created the first RMN and because of its scale, has reaped the benefits, with Amazon Advertising making up almost 70% of Amazon’s total global profits.8
Within the grocery industry, the bigger players are monetizing their digital advertising, as CPGs will only want to invest in RMNs that can deliver digital impressions at an efficient scale. For example, Walmart Connect and Kroger’s Precision Marketing account for 5% and 9% of their respective companies’ total EBIT for FY’23, and these figures are expected to rise to 23% and 39% within five years.9
Up to this point, independent and regional grocers have had limited access to RMNs. Not only does this hinder you, but it compounds existing competitive pressures within our industry. But we want to change that.
8 Boston Consulting Group, “How Media is Shaping Retail,” March 2022
9 Cleveland Research Company, eMarketer H1 2024 RMN Forecast, SBI Estimate for SAM
Introducing UMN™: the UNFI Media Network™, Powered by Swiftly
At a time when conventional grocer market share and revenues continue to be pressured by club and mass retailers10, it’s important that you have access to tools that keep your stores thriving and allow you to compete in today’s marketplace.
We’ve developed a comprehensive RMN solution to meet your digital needs. The UNFI Media Network™, powered by Swiftly, is designed to enable independent and regional grocery retailers to reach their shoppers digitally while connecting to the industry’s largest collection of brand partners, who in turn, can take advantage of this platform to more effectively market directly to shoppers through the retailers in the network.
We know that you are some of the strongest candidates to engage with the RMN technology, because of your strong foundations of trust that you have built with your consumers. Because of the relationships you have established with your shoppers, they trust you and are more apt to try new products that you recommend.11
The UNFI Media NetworkTM integrates with many existing e-commerce and in-store systems, so you can deliver personalized, real-time advertisements to your customers. The UNFI Media Network™’s advanced data analytics allow you to reach your customers based on their shopping history, preferences, and digital behavior.
We’ve worked hard to provide you a user-friendly platform, with intuitive tools that enable grocers to easily manage and optimize their campaigns. We also offer robust support services, including training, analytics reporting, and ongoing technical assistance, ensuring that our clients can maximize the UNFI Media Network™’s cutting-edge retail technology solutions.
Many grocers have already benefited from our RMN, reaching their customers in an authentic way.
Case Study: Dierbergs and the Impact of Retail Media
Dierbergs is a regional grocery chain with 27 stores in the St. Louis metro area. The family-owned business began in 1854 and is now run by Bob, Laura, and Greg Dierberg.
While Dierbergs was doing well as a chain, they saw challenges in their marketing. How could they engage their customers digitally while showcasing their in-store customer experience for which they were known? How could they expand their marketing communications and media reach? And how could they compete against larger grocery chains?
Dierbergs needed a solution that would distinguish its offerings and grow their business without significantly increasing marketing spend.
10 Internal UNFI Strategic Business Intelligence market review
11 Quad: Retail Media Networks, “How regional grocers and other new players are transforming the landscape”
“The market is evolving so quickly that we needed the guidance of experts to help us evolve with it and continue to compete,” said Greg Dierberg.
ADDING REAL VALUE TO THEIR MARKETING
Dierbergs knew their customers wanted personalized offers but needed help to compete.
“Our competitors already are able to provide those offers to individuals where they are online,” said Greg Dierberg.
To level up their marketing, they partnered with Swiftly, our UNFI Media Network™ partner, to implement a retail media network across their digital platforms.
“We’re operating a business with a personality and that is closely connected with our customers, and now we are able to reach and relate to all different groups of shoppers and meet them where they’re at, regardless of generation or how they like to shop.” said Greg.
FINALLY HAVING A SEAT AT THE TABLE
With its retail media network, Dierbergs improved its ability to reach shoppers and has seen significant growth and digital engagement.
“The decision to utilize a Retail Media Network gave us access to a pool of money that we never would have had access to before. We get to participate in vendor funding that otherwise would go [to digital media companies] or to our competitors,” said Laura Dierberg.
“Swiftly brought a lot to the table in terms of development [of our online presence] in a meaningful way that we could never have done without their leadership,” added Greg. “They’re bringing the critical scale and thinking power that we couldn’t do by ourselves.”
THE POWER OF DIGITAL ADVERTISING, PERSONALIZED TO YOUR NEEDS
As we have seen, digital marketing has become about meeting the shoppers’ needs and desires based on what we know about their purchasing patterns. While the big retailers have used that data to their advantage, the opportunities to gain new growth by taking advantage of CPGs’ digital spend and stand out in a crowded grocery landscape are now available to you.
UNFI is built for your growth. With valued-added services like the UNFI Media Network™, we can help you gain a competitive edge while maintaining the uniqueness of your store.
If you’re ready to have a seat at the table, fill out our UNFI Media Network™ form and one of our associates will reach out to start the process of adding you to the network.
For More Information
To learn more about how UNFI Media Network™, powered by Swiftly, can help you compete in an increasingly digital-first world, please visit: https://www.unfi.com/unfi-media-network.html
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Credits
RESEARCH & INTELLIGENCE
• Nathan Tuggle, VP Corporate Marketing
• Neil Savage, Marketing Insights
• Zoë Listro, Marketing Insights
EDITORIAL
• Matt Eckhouse, President Digital & Professional Services
