Why Every Retail Business Is Now a Media Business (and Why Advertisers Care)
There was a time when experts said that every business was a media business. It was the birth of the social media revolution in business, and the idea then was that any company with a team of smart content producers and social media mavens could engage in a more authentic and effective way. its stakeholders, starting with customers and partners. without the help of traditional media companies.
It was a time of optimism, and since then the record of companies making this profound transition has been mixed. But move quickly into this era, and there is one industry that is ready to not only make this transition, but also make it more profitable: retail.
First party data
There are at least three reasons why retail businesses should feel optimistic about the media. These reasons tie in with the goals of tech giants like Amazon, which are showing interest in this hotly contested market almost every week.
The first reason? Retailers are uniquely positioned to create and sell media because of their unique access to what the advertising industry calls first-party customer data. I work for a company that enjoys the unique success of creating one of the first customer loyalty programs for retailers in the 90s. At the time, loyalty cards foreshadowed the future of selling retail smart, where anonymous customer data could help in multiple ways, including pricing and promotion, store design and assortment, and more recently, personalized engagement with key customers.
Now we are starting to see the value of this data as the foundation for smart media and advertising to support this media, online and offline. First-party data is becoming the foundation of smart advertising in an age when customer data is more important than ever. But the quality of the data must be carefully assessed. This puts forward-looking retailers in an enviable position to engage with brands looking for better ways to navigate new media realities.
And this leads to the second reason why retailers need to adopt their identity as media companies: of all industries that are able to reap measurable benefits from their commitment to create and sell media to advertisers, the sale retail emerges in the foreground.
Why? Here is a little background.
Recently my company was asked to help a European food retailer explore the opportunity to sell media to their vendors. The increase in profit during his first, modest effort was in the order of 1%. It may not seem like much, but when you consider that the average margin of a grocery retailer is 3%, the profit jump is huge – 33%. So it’s no surprise that retailers around the world – including Walmart – assess their retail assets and prowess, especially in the age of Amazon, which has long benefited from selling media to the brands it represents online.
In Forrester’s recent report, “Retailers: you are the next media mogul,“one retailer noted:” It’s no secret the margins [for advertising] are in very good health “, while another stressed that the business is” material and important “.
But before we close, let’s look at the other side of the equation. A very large brand recently worked with the same retailer mentioned above to more strategically leverage their media assets to connect with customers. The result? An 11% increase in sales. That’s a staggering number, whatever type of brand you are.
The return of brick and mortar
The last and most important reason retailers should think of themselves as media companies is that retail companies have media properties that allow for unique engagement with consumers. I’m not just talking about ecommerce sites – which many retailers are increasingly adopting – but actual in-store environments that need to emotionally and physically connect with shoppers using media and technology.
Best Buy, for example, has successfully led the way on this front by leveraging the showrooming phenomenon into a revenue stream by instructing brands to showcase their products in-store. Plus, with most sales still taking place in-store, the bottom line is that only open TV compares to stores in terms of the chances of interacting with shoppers.
Who should care? Beyond retailers, think about the multitude of brands struggling to find their way into the new world of media, especially those that are lose confidence in social networks. Offline or online, there is no industry that has properties to engage consumers as diverse as the retail industry.
The only question remaining is whether more retailers will be aware of this opportunity. Like so many other disruptions, the “every retail business is a media business” paradigm began with a few market-leading entities leading the way for others.
Apparently every week for the past two years we have heard of retail bankruptcies, store closings and employee layoffs. At the same time, albeit in a less visible fashion, we’ve heard stories of retailers crushing it – for example, small-format retailers like Trader Joe’s, which for the second year in a row is at the peak of an annual consumer preference study. Discount retailers like Lidl and Aldi have found ways to deliver more value to their customers, despite lower prices. And many retailers have found ways to develop tightly aligned operational plans with unique strategies for engaging customers. Increasingly, the media, which primarily aims to engage customers, are one of these strategies.
All is not bad in the industry. But I’m not just betting on early adopters. I predict the democratization of the ‘every retail business is a media business’ paradigm, where the entire retail market can benefit and grow stronger against the headwinds of what is arguably the industry the most. most competitive in the world.