With The Co-op announcing the launch of the UK’s first retail media network in the convenience sector, Retail Week assesses whether the advertising platform is a viable option for all retailers to explore.

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The Co-op worked with 450 brands last year in its retail media network

While retail media advertising is hardly a new thing, there has been a recent boom in investment, driven by the rise in online shopping.

Retail media networks are advertising platforms that allow third-party brands to advertise on a retailer’s website, app or other digital channels to an already engaged audience. Brands benefit from the retailer’s first-party data to gain insight into what shoppers are browsing and purchasing, helping them target the right customers.

Amazon launched the first online retail media network in 2012, Tesco and Boots started building theirs in 2021, and Currys and B&Q launched their platforms last December. 

Media investment company GroupM’s June 2023 report predicts brands will spend £6.5bn on retail media in the UK by 2027, and that revenues will exceed TV advertising revenue by 2028. Why the upward trend?

Valuable revenue streams

While The Co-op Group introduced the first UK retail media network in convenience last week, it has been in the retail media space for some time – it delivered close to 2,000 campaigns and worked with 450 brands last year.

It has also seen brands “double their investment levels” in its retail media network over the last five years.

Dean Harris, The Co-op’s head of media network, says the extension into convenience presents a “big opportunity”.

“There’s a big opportunity for brands to appeal to high-footfall convenience audiences close to the couch and close to the office”

“Retail media allows us to get into new channels to repurpose profit back into our core businesses and provide increasing value to shoppers over time.

“If you reflect on The Co-op as a small-shop, high-street convenience retailer, there are a lot of shoppers going in and out,” he says.

“There’s a big opportunity for brands to appeal to high footfall audiences close to the couch and close to the office.”

Currys launched their own retail media network in December, and chief data officer Susie Moan says brands are already getting a “strong return on ad spend” through leveraging Currys first-party customer data.

“It’s no secret that retail media networks are increasingly valuable revenue streams for retailers.

“Important players such as Samsung, Acer and Hisense are already harnessing the power of Currys Connected Media – they’re able to understand potential buyers by understanding our customers through our insight capabilities with our customer data, and then they’re working with us to reach and influence these shoppers online and in store.”

Maximising data sources

With a wide range of industry sectors getting in on the act, Nick Morgan, founder of software company Vudoo, believes every retailer should consider utilsing retail media.

Morgan says: “With costs continuing to increase, this is a great way for retailers to drive new revenue streams and build out their margins.

“Retail media is putting the power of advertising in the hands of retailers, which is a really interesting proposition.

“I think it’s something to be reckoned with and if you’re not paying attention to it, you’re doing yourself a disservice.”

Sam Knights, chief executive of commerce marketing agency SMG, has helped set up many UK-based retail media networks, including Boots, Morrisons, The Very Group, The Co-op and Asda.

“Any retailer can look at retail media as it’s going to become a fundamental part of operating models being competitive and driving profitability”

In the wake of Apple eliminating third-party cookies and Google starting to phase them out too, Knights says brands are looking for other sources of digital data to target their advertising, and retailers are sitting on this data in their loyalty schemes.

“Tesco has the Clubcard, Boots has the Advantage card and The Co-op has its membership prices,” he says.

“Loyalty schemes hold amazing first-party data, which is GDPR compliant, and brands can use those data sources to target customers efficiently.”

“Retail media is a great thing because it delivers a good return on investment and is totally measurable.”


Currys is harnessing its customer insight capabilities to support brands’ ad revenue

Knights believes grocery is the biggest player in the UK retail media space but that the electricals and DIY sector are also seeing “amazing results”.

However, retail media networks can be a struggle for the fashion sector as the power dynamic between a brand and fashion retailer is “different”, according to Knights.

“For example, Nike could say to a retailer, ‘I’m not paying you to do this because you’re lucky to be selling our products’, so fashion is tricky.

“But I do think any retailer can take a look at retail media as it’s going to become a fundamental part of retail operating models being competitive and driving profitability.”

Opportunity for growth

The global retail media market is expected to reach $100bn (£78.5bn) by 2026, according to Boston Consulting Group, and one of the leaders in this space is Amazon.

“Amazon has built a $40bn-plus advertising business that we believe produces a very solid amount of profitability for the organisation,” says McKinsey & Company partner Craig Macdonald.

“Retail media has moved in the last 12 months from being ‘innovative and interesting’ to something retailers are seeing as necessary.”

That being said, investing in the advertising platform is not always smooth sailing, he points out: obstacles of scale and costs can cause problems for retailers and brands, even finding the right salespeople.

The future looks bright

With the value of retail media networks set to keep on growing in the years to come, it’s clear that this won’t be a fleeting trend. 

Currys has “a number of exciting announcements” in the pipeline, and Moan wants it to become the “go-to network for advertisers and brands looking to engage tech-hunting consumers.” Meanwhile, at the Co-op, Harris wants to “revolutionise the market” and believes the Co-op can become a champion in this space.

Ambitious retailers seeking to build on revenue and improve margins should defintilely consider retail media networks as a strategy, but having the right scale, tech and knowledge will be key to success. 

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Retail media: Why first-party data could transform your revenue potential

New high-margin revenue streams? What’s not to like? With predictions that the retail media market will outgrow TV advertising revenue by 2028, leaders from Boots and Asos give the retail media lowdown. What does an optimum retail media roll-out look like? Which retailers are most suited to this growth opportunity, what are the pitfalls to avoid, and why is a strong first party data strategy is central to its success? We will explore:

  • What a good retail media strategy looks like
  • Examples of success
  • Who is most likely to benefit
  • How to strike the balance of hyper-personalised yet non-intrusive advertising

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