Retail media for retail alliances: unlocking the €31 billion opportunity

There’s growth, and then there’s growth. From €13.8 billion today to €31.3 billion by 2028, Europe’s retail media market is about to go into overdrive. IAB Europe predicts an increase of more than 125% over a period of just four years¹. Compare that to growth of "just" 6% across Europe’s digital advertising market as a whole² in the same period, and it’s quickly clear just how appealing retail media is becoming to brands.

There’s no shortage of ways for them to tap into retail media’s transformative potential, either. Across the world, well over 200 retail media “networks” are now in existence³, more than 50% of which are located (or have at least some presence) in EMEA.

Europe’s grocery retail market is, of course, extremely diversified. In Western Europe, hypermarkets and supermarkets frequently brush shoulders with discounters, convenience, stores, co-operatives, and more. Then, of course, there are retail alliances—strategic partnerships between different retailers in pursuit of common goals.

To date, a lot of the focus around retail media has been squarely on "traditional" retailers—those aforementioned supermarket and hypermarket chain operators. Alliances, which are inherently that much more fragmented, don’t tend to fit the classic retail media mould.

Does that mean that retail media can’t deliver incredible results for these businesses, too? Far from it. At the same time, retail media for retail alliances does raise some specific considerations, which is why—in this post—I’d like to look at some of the main things that alliances should think about when exploring the retail media opportunity.

Better together: retail alliances

A retail alliance (or association) takes the form of a strategic partnership between different retailers. Said organisations are usually looking to pool their resources or combine their strengths— to achieve operational efficiencies, boost their buying power, or deliver on another common goal. Ultimately, members of an alliance enjoy the benefit of being part of a larger collective, while also maintaining their independence.

Typically, that same element of independence is what complicates the situation from a retail media perspective. Creating a "productised" retail media offering can be difficult enough within a single retail organisation—let alone across a group of individual entities. Because of that, there are a few specific issues that members of an alliance need to take into account. These include:

• Product hierarchies
  Bringing different retailers together means that you’re also bringing different products—and product hierarchies—together. Creating some commonalities (and an understanding of those commonalities) is essential for effective targeting and measurement.
• Data sharing
  Just because they’re in an alliance, that doesn’t mean retailers are no longer in competition with one another. Naturally, that can make it difficult for members to share data—particularly sensitive information like records on customers and transactions. Separate data management solutions are usually needed as a result.
• Operating models
  One of the key advantages to a retail alliance is that it creates abundant room for efficiencies. That philosophy needs to feed through to a combined retail media offering, too—ensuring that different members aren’t doubling up on effort.
• Revenue sharing
  Revenue (and costs) need to be passed fairly between alliance members. That means being clear and transparent in all regards.
• Finding the right starting point
  It’s rare for every retailer in an alliance to be at the same point on their retail media journey. It’s important to make the offer as easy as possible for advertisers to buy in, considering the competition from the vast number of retail media networks available. Creating a uniform offering and value proposition is critical, but will require work.

While there are challenges here, overcoming them is undoubtedly worth the effort—not least because an alliance-based proposition delivers on the kind of scale that brand advertisers are looking for.

Scale is massively important in retail media. Having deep insight to the behaviours of individual customers is great, after all, but to activate on that intelligence you also need the reach to engage them. That’s especially true for upper funnel campaigns, where mass awareness is the ultimate goal. So, scale is essential if a retail media proposition is going to maximise investment from brands.

It's not just about reach, however. Depending on the partners involved, an alliance-based approach to retail media can also give brands a huge amount of variety when it comes to targeting. Whether it’s customer profiles, product specialisms, geographic focus, or something else entirely, an alliance can give brands the kind of diversity that they might struggle to achieve with other advertisers.

Finally, there’s the sheer element of combined strength at play too. By working together—something they’re already used to through trade agreements—alliance members can also spread the cost of retail media. Some of the most likely efficiencies include savings on resource, technology, and marketing.

Getting things moving

Retail alliances undoubtedly follow a different model to traditional grocery chains. That’s not to say they’re so different that many of the same rules don’t apply when it comes to retail media, though. The process of getting a retail media programme underway is one area in which lessons learned elsewhere can be just as valuable for alliances.

To that end, retail alliances looking to kickstart their own media initiatives should:

• Focus on executive sponsorship—across the alliance
  To deliver real value, retail media needs support from multiple departments. It’s a cross-functional discipline, and media programmes often need executive sponsorship in order to gain the right level of engagement. For alliances, that means that senior leaders across the different businesses need to come together to drive things forward.
• Create a compelling offering for brand advertisers
  There are more than 230 retail media networks in operation today. Whether it’s scale, reach, or something else entirely, a retail alliance will need to present advertisers with a compelling reason to invest in their network (alongside the others).
• Make it an easy sell (literally)
  Complexity is the enemy when it comes to retail media. Many networks now give advertisers easy ways to buy across stores, formats, and audiences. Alliances can’t afford to let their disparate nature get in the way of an easy experience.
• Be prepared to invest in the operational—and cultural—effort required
  From data and technology through to people and culture, creating a retail media programme is no small task. The right partner can help to guide you through that process—and provide many of the tools and technologies required—but building a retail media business still requires commitment and effort.

1 European Retail Media set to double in four years – WARC, 3rd October 2024
2 Digital Advertising – Europe – Statista
3 List of Retail Media Networks – Mimbi, September 2024