With seemingly everyone jumping onto retail media, it may feel too late or intimidating to grab a piece of the pie. But that’s not the case, according to Jason Farver, Hy-Vee’s executive vice president, chief supply chain officer, and president of RedMedia.
“Everybody’s trying to figure it out,” Farver said of retail media. “It’s still kind of the wild west. It’s the new frontier. So the growth that’s out there, the possibilities, those get me excited.”
Hy-Vee’s RedMedia launched in September, and even as a smaller player, it still has an opportunity to grab some of the omnichannel retail media ad spend pie, which will more than double from $46.66 billion to $110.35 billion between this year and 2027, according to our forecast. Here are some lessons other retailers who may be new to the retail media network (RMN) game can learn from Hy-Vee’s RedMedia.
Even though its ad spend explosion has happened quickly, retail media is still relatively young. Retail media is still in its test-and-learn phase for a lot of smaller players.
“I think we maybe went into [retail media] thinking we were farther behind, and now we feel more confident that maybe people don't have anything that much more figured out than we do,” said Farver.
Retail media may be young, but working with brands to sell their products is not. Retailers need to use their existing resources to create a foundation for RMNs. Consider which parts of your business work with brand marketing dollars and leverage them. Hy-Vee also leveraged existing relationships with brands, talking to over 150 of them about their needs and wants before launching, Farver said.
Amazon will account for 74.2% of all US retail media ad spend next year, according to our forecast. For anyone who isn’t Amazon (or Walmart, which has the second-biggest RMN), the opportunity lies in differentiating what your RMN can offer brands. At Hy-Vee, this means customizing campaigns.
“We’re a little bit smaller than some of the big ones like Walmart, where we can customize and do some white-glove treatment of our customers and serve them a little differently than some of the bigger retail media networks out there,” Farver said.
The smaller consumer base also means brands can test and learn what’s working without taking extreme risks with their ad dollars. Smaller RMNs should find these chances to offer unique ad value to brands.
In-store retail media ad spend is growing even faster than online, according to our forecast. In-store ad spend will total just $370 million this year, but up-and-coming RMNs have a huge opportunity to lead the way in in-store innovation.
“There’s this race to figure out the in-store portion of it,” said Farver. “And if you look at our customer base, we still see 85% plus of our customers walk into physical brick-and-mortars every single day and every single week. And so that’s where we really are trying to differentiate ourselves.”
Next year, 83.4% of all retail consumer spending will come from in-store sales, according to our forecast. Brick-and-mortar is a place where Amazon has struggled to find its footing, leaving an opportunity for smaller players. At Hy-Vee, this means experimenting with in-store audio, digital TV screens, and a recent Samsung partnership to expand these ad dollars.
Hy-Vee focuses on points of rest for customers, meaning places like meat counters and pharmacy lines where shoppers are standing still for a few minutes. Inundating stores with ads can leave customers feeling overwhelmed, but placing ads in relevant spots will help shoppers instead of annoying them.