Groceryshop 2024 Day One: Retail Media Is Not for All Retailers!

Introduction

Coresight Research is a research partner of Groceryshop 2024, which is taking place during October 7–9, 2024, in Las Vegas, Nevada. Groceryshop is an annual conference that helps businesses navigate the evolving grocery landscape, exploring the latest business models, advanced technologies and shifting consumer behaviors.

This year, the conference covers five major themes in retail: seizing new opportunities in retail media; building profitable, efficient and resilient businesses; implementing and scaling AI applications; delivering convenient, seamless and unified shopping experiences; and embracing collaboration, innovation and new partnership structures. (Not all coverage reports cover all five themes.)

We present key insights from the first day of Groceryshop 2024.

Groceryshop 2024 Day One: Coresight Research Insights

1. Seizing New Opportunities in Retail Media

Retail media was perhaps the biggest topic on day one of the conference, with speakers highlighting not just the benefits of retail media as an alternative revenue stream for retailers but also the challenges associated with this channel.

During the “Effective Offsite and In-Store Retail Media Activations” session, Michele Roney, EVP, Retailer CX, Mars United Commerce, cautioned retailers: “Just because you can offer in-store and offsite, it doesn’t always mean you should.” She said that the value of offsite retail media depends on the audience and on measurement capabilities.

Ram Krishnan, CEO, North America Beverages, at PepsiCo, made a similar point when he briefly touched on retail media in his mainstage keynote, stating that PepsiCo is “very willing to invest in RMNs [but] not all retailers should be media companies.” When evaluating an RMN (retail media network), Krishan said that trust in data and APIs (application programming interfaces) is paramount, and the network’s processes must be easy to complete for brands. In short, RMNs need to meet the same criteria to which PepsiCo holds regular media companies. During the “Effective Offsite and In-Store Retail Media Activations” session, Mike Glaser, Vice President of Digital Commerce Marketing at PepsiCo, outlined the evolution of the company’s marketing mix to reach shoppers across all touchpoints in a connected way. According to Glaser, PepsiCo’s strategy rests on three pillars: being targeted, measurable and scalable.

In the last presentation of the same session, Neha Mallik, Head of Connected Commerce at Mizkan America, commented that retail media “is a journey, not one size fits all.” Overall, the session revealed the steady evolution of retail media, expanding beyond the retailer’s website to encompass other channels such as offsite (e.g., in social media) and in-store.

• For more on the US retail media market, see our report, The US Retail Media Market: Understanding the Ad Buyer’s Perspective in CPG, produced in partnership with NIQ.

Roney discuss the value of offsite retail media
Source: Groceryshop

 

The “Unified Retail Media Planning” session saw Udyan Khanna, Vice President of Marketing, Digital Commerce and Channel Marketing at McCormick & Company, discuss the challenges in assembling retail media teams and setting advertising budgets. Currently, retail media has reached a certain level of maturity, meaning that retailers require less convincing and educating to understand its value. Still, retail media is governed by budgets, which face a constant conflict between the divergent goals of marketing and sales but still need to be cohesive, according to Khanna. He described people with the talent to understand both the marketing and sales functions as “unicorns”—rare to find and key success enablers for RMNs.

Michal Geller, President of E-Commerce and Digital at Newell Brands looked ahead to the future of retail media, powered by AI (artificial intelligence). He outlined two changes that are likely to occur in the coming years:

• There will be a shift away from SEO (search engine optimization) and toward “AI-O” or AI-driven search.
• Brands and retailers will have the ability to conduct personalization on a massive scale and send an unlimited number of campaigns to an individual; however, the technology is not there yet.

Left to right: Francesca Hahn, VP, Digital Commerce, Mondelēz International; Khanna; Geller; Katherine Black, Partner, Kearney (Interviewer)
Source: Groceryshop

 

The “Retail Media Capabilities that Satisfy Shoppers and Advertisers” panel focused on marketing opportunities, the continuing importance of physical stores and the use of data in refining retail media strategies. Chelsey Alexander, Vice President of New & Emerging Channels at Bayer Consumer Health, outlined how retail media enables marketers to address the full marketing funnel, as compared to traditional marketing strategies that only target the mid- to lower funnel, both on- and off-site.

However, decisions to divert marketing dollars from other sources have resulted in other marketing activity drying up, as the total number of advertising dollars remains constant, according to Raquel Navarrski, Customer Vice President of North American E-Commerce at General Mills. She anticipates that e-commerce penetration will peak at around 20%–30% of total sales, which means that stores will remain important, and retailers that can create a differentiated in-store experience will thrive. She showcased this idea with an example of how General Mills used real-time data obtained in a partnership with Amazon’s Thursday Night Football to make strategy adjustments, which boosted ROAS (return on advertising spend.)

With regard to AI, Sean Ransenberg, Managing Director of H-E-B, expects generative AI (GenAI) to deliver relevant customer experiences and blur the line between content and advertising, making use of a large quantity of data to create more relevant content. GenAI remains in its early stages but promises great leaps in targeting and personalized content creation.

• For more on retail media from around the world, see our coverage of Shoptalk Europe 2024.

Left to right: Navarrski; Alexander; Ransenberg; Naomi Alford, Partner, Bain & Company (Interviewer)
Source: Groceryshop

 

2. Building Profitable, Efficient and Resilient Businesses

Sam’s Club, a warehouse club owned by Walmart, is focused on listening to customers and then innovating based on their demands. Chris Nicholas, President and CEO of Sam’s Club, offered the example of the company implementing scan-and-go technology (now used by 30% of its members) to respond to customers’ desire for less friction and great experiences. Sam’s Club is working to digitally engage more of its members, as these shoppers spend 3X the amount that non-digitally engaged members spend.

The company is also strategizing to change the way the warehouse-club model is perceived. Warehouse clubs are no longer about stocking up; that is a “thing of the past,” according to Nicholas. Instead, these stores are considered for “top-up shops,” leading to more younger consumers joining Sam’s Club. Value, convenience and enhanced tech are also bringing younger consumers in, Nicholas said.

Nicholas emphasizes the need for retailers to listen to customers to drive success
Source: Groceryshop

 

Reducing friction is important in any retail sector, but it is critical in sectors where friction is often viewed as a baked-in part of the shopping experience, such as warehouse clubs. By reducing friction—as well as increasing value and providing innovation via technology implementation and private-label brands—players in the grocery space can appeal to both younger consumers and those simply looking to lower their grocery spending.

In the “New Consumer Behaviors and Habits to Watch” session, Sherry Frey, Vice President of Product Insights at NielsenIQ, dove into the top concerns of US consumers, revealing that personal finance remains at the top of the list. Despite these concerns, Frey claimed that grocery shopping is improving, with both total trips and dollars-spent-per-trip both up, meaning that brands and retailers attempts to provide value are likely working. She also stated that critical shifts in generational spending will occur over the next five years, telling attendees to “keep [their] eye on millennials and how they are shopping.”

In the same session, Sally Lyons Wyatt, Global Executive Vice President and Chief Advisor, Consumer Goods & Foodservice Insights at Circana, explained that retailers should look to optimize their assortments, create agile activations and adapt to shoppers’ quest for value if they want to succeed in the years to come. “What value and convenience means is impacting how people shop and where they shop,” Wyatt explained.

Frey points to generational spending shifts as a trend to watch
Source: Groceryshop

 

Dr. Oliver Vogt, CEO, Transcend, at Tesco, was asked where he sees the grocery space heading over the next five years. According to Vogt, labor availability and the cost of labor will become even bigger topics, meaning that automation will play a larger and larger role. As a result, not only will automation in grocery become more widely available and used, but labor will be used more efficiently and workers will gain more mastery over their craft.

3. Delivering Convenient, Seamless and Unified Shopping Experiences

Frans Muller, President and CEO of Ahold Delhaize, said that research conducted by his company revealed that some things matter to most people irrespective of location or generation: Value, convenience and quality drive shoppers to grocery stores. In order to meet these consumer demands, Ahold Delhaize is investing in private-label and omnichannel offerings, retail media opportunities and personalized deals.

Muller believes that omnichannel offerings will remain particularly important over the next five years, as stores will continue to act as community pillars where customers develop trust with individual retailers. Private-label offerings will also be key to Ahold Delhaize’s growth moving forward: By 2028, the company wants 45% of its sales to be private-label sales, up from where it stands now (38% overall; 31% in the US, specifically).

Muller (left) discusses the role of omnichannel in grocery retailing with Melissa Repko, Retail and Consumer Reporter at CNBC (right)
Source: Groceryshop

 

These topics were also touched on during the “Building Loyalty in an Era of Fickle Shoppers and Unified Commerce” panel. There, Krishnan from PepsiCo explained that brands and retailers must understand the importance of unified commerce in the modern retail environment. Unified commerce allows companies to meet the needs of consumers from around the world, ensuring that they can get the products they need in the places that they need them. “What does the consumer demand? [For us to] have the right product in the right store [and fulfilled] by the right fulfillment method,” Krishnan explained.

However, having a unified commerce strategy is not enough. Krishnan stated that brands and retailers need to be consistent, offer personalized deals and ads, and reward people for their loyalty; then, buyers will become brand ambassadors—an approach that Krishnan termed “precision loyalty.”

Looking forward, PepsiCo hopes to enhance its anticipatory assortment strategies via AI and computer vision.

• For more on unified commerce, read our free report: From Omnichannel to Unified Commerce: Elevating Cross-Channel Customer Experiences to the Next Level

Krishnan highlights unified commerce as a key focus area for PepsiCo
Source: Groceryshop