The facts on retail media – insights from our research

Retail media has dramatically evolved from a simple marketing channel into a vital component of the retail industry’s commercial infrastructure. To provide insight into where Australian retailers currently stand and where they’re headed, PwC conducted a comprehensive survey of industry professionals, including decision-makers, influencers, channel partners, and agencies. Our research gathered perspectives from small retailers with 5-19 employees, medium retailers with 20-199 employees, and large enterprises with 200+ employees.  

Our findings reveal that while retail media is gaining momentum among medium and large Australian retailers, its development still lacks maturity and cohesion across channels. Despite being identified as a strategic priority, with 42% of medium and 40% of large retailers expecting significant growth, current strategies often fall short in execution. Enterprise retailers continue to invest and expand, yet many struggle with effective scaling strategies and demonstrating incremental value back to the business themselves and their suppliers.  

This transformation in retail media is no longer merely an option; it is a necessity for those aiming to lead in the dynamic retail environment. Initially designed to capture shopper attention, retail media has grown into a sophisticated digital ecosystem, enabling forward-thinking retailers to turn their platforms into media powerhouses. This strategic shift has the potential to unlock new revenue streams and revolutionise customer engagement, positioning retailers to not only survive but thrive in the rapidly changing market.

Leading retailers are pioneering a new era of commerce by leveraging their extensive physical and digital ecosystems to create seamless omnichannel networks, maximising customer touchpoints for consistent branding and engagement. By implementing advanced data analytics and AI-driven strategies, these retailers deliver personalised promotions and real-time offers, boosting conversion rates, customer satisfaction, and loyalty.

This innovative approach has transformed customer interactions into monetised media opportunities, attracting significant advertising spend from suppliers and brand partners eager to connect with expansive customer bases. The strategy generates substantial new revenue streams beyond traditional sales, with some retailers reporting double-digit growth and revenue contributions in the billions.

Grocery retailers have led the way, leveraging their wide network of stores, digital platforms and vast shopper data to command the lion’s share of spend. These are complemented by networks from hardware, pharmacy and department stores, which focus on category-specific targeting. However, none have managed to capitalise on the opportunity and dominate in the same way a major retailer has in the US. Which leaves the question, what is holding Australian retailers back?

Australian retailers have reported significant challenges advancing their retail media strategies. These include:

While 23% of large and 21% of medium Australian retailers use sophisticated omnichannel strategies that integrate multiple touchpoints and personalise customer experiences, the majority take a narrower approach. Most retailers (48% of large and 41% of medium) primarily engage customers through e-commerce and social media channels only.

While these methods are fundamental, they represent a narrower approach that lacks the multidimensional reach of a comprehensive strategy. Expanding beyond these limitations to include a full spectrum of retail media channels, such as personalised email campaigns, experiential retail experiences, and real-time data-driven content, is essential for retailers seeking to enhance engagement and effectively meet evolving consumer expectations.

There are significant opportunities for retailers to differentiate themselves by empowering their data analytics capabilities. By focusing on converting data into actionable insights, retailers can achieve precision marketing tailored to key decision points. Enhancing real-time data processing, aligning analytics with business goals, and customising content will allow retailers to unlock the full potential of personalisation, setting them apart in the competitive market.  

When considering the entire lifecycle of point-of-sale (POS) advertising, perceptions of cost savings with digital in-store solutions compared to paper-based ones vary.

• Justification for Digital Transition:
  • 47% affirm that savings justify transitioning to digital POS systems.
    • This includes 55% of medium retailers and 60% of large retailers.
• Hesitation Due to Insufficient Savings:
  • 28% of medium retailers and 14% of large retailers are unconvinced by the savings to switch to digital POS.

This highlights significant opportunities for retailers to capitalise on the advantages of digital POS systems. Many retailers already recognise the potential for substantial cost savings and are poised to benefit from enhanced operational efficiency. For those still uncertain, this represents an exciting opportunity to explore innovative strategies that align digital solutions with their specific business objectives. By focusing on the overall value and long-term benefits, retailers can confidently transition to digital systems, positioning themselves for increased competitiveness and success in the evolving market landscape.

Retailers who seize this moment to integrate the two will have the best chance of leading the next wave of commerce innovation.