The retail media paradox: A fragmented market with a unified opportunity
Opinion
Retail media has a problem. It is becoming one of the most important parts of the modern media mix, yet from a brand’s perspective, it can feel like one of the hardest to make sense of.
The promise is obvious. Retailers have something every media owner wants: rich first-party data, huge consumer audiences, a direct relationship with shoppers and, critically, proximity to purchase. But, as more retailers enter the market, the ecosystem is becoming increasingly fragmented: more networks, more platforms, more propositions, more data, more dashboards and more measurement methodologies.
For brands, the question is no longer whether retail media matters; it is whether the industry can work at scale.
The brand’s-eye view is different
Retailers understandably see retail media through the lens of the assets they own, but brands see it differently. A brand does not wake up wanting to buy ‘Retailer A or B media’, it wants to reach the right consumer, in the right environment, with the right message, and drive incremental brand and commercial growth. That distinction matters.
When planning across multiple retailers, brands can find themselves navigating different audience definitions, buying mechanisms, data environments, commercial models, reporting structures and approaches to measurement. The result is an ecosystem that can be highly sophisticated at an individual retailer level but surprisingly difficult to navigate collectively.
This is where the retail media paradox starts to emerge.
The industry is promising brands greater precision, accountability and measurable commercial impact. Yet the fragmentation of the market can make it harder to compare investment, understand duplication, establish incrementality and assess the role retail media is playing within the total media mix.
More precision does not automatically mean more clarity.
Fragmentation isn’t the enemy
It would be wrong to suggest that every retailer should look and operate the same. Retailers have different customers, shopping missions, physical footprints, digital ecosystems and datasets; their retail media propositions should reflect that.
The problem isn’t that there are lots of retail media networks; it is that those networks become difficult to connect.
From a brand perspective, there is a growing need for common principles around measurement, transparency, data interoperability and definitions of success. Not standardisation for standardisation’s sake, but where it removes unnecessary friction.
Because brands are increasingly being asked to move investment into retail media while still being expected to demonstrate how that investment works alongside TV, video, social, influencer/creators, search, out-of-home and other channels. That requires more than retailer-specific reporting. It requires an ecosystem view.
Retailers need to own some of the problem
This is where the conversation needs to become more challenging.
Retailers have been understandably focused on building their own retail media businesses. They have invested in data, technology, sales teams, inventory and measurement capabilities, and many have created genuinely compelling propositions. But there is a danger that every retailer optimises for its own media business while expecting brands to solve the complexity it creates.
Brands shouldn’t have to build a bespoke operating model for every retailer simply to participate in the category. Nor should they have to reconcile fundamentally different definitions of audiences, outcomes and incrementality before they can understand how their total retail media investment is performing.
If retailers want retail media to be treated as a strategic media channel, they need to start behaving like strategic media owners.
That means being prepared to address the friction that sits beyond their individual platforms: greater transparency, more consistent measurement principles, and making data and reporting easier to integrate.
And it means recognising that the value of retail media ultimately depends not just on the strength of an individual retailer’s proposition, but on the health of the wider ecosystem.
Retailers need to take greater collective responsibility for making the market easier for brands to navigate.
We need to stop measuring the channel in isolation
Retail media has rightly made accountability one of its biggest selling points. But we risk creating a world where every retailer can demonstrate a positive return on its own investment, while brands struggle to understand the incremental value of the system as a whole.
If five retailers all report that their media drove sales, what happens when the same consumer has been exposed to all five? If a retailer claims a strong ROAS, how much of that outcome was genuinely incremental, and how does that investment compare with the next best use of the brand’s money?
These are not questions designed to undermine retail media; they are questions that need answering if retail media is going to become a genuinely strategic part of the media ecosystem rather than a collection of increasingly sophisticated trade partnerships.
The opportunity is bigger than the network
Retail media potentially brings together consumer behaviour, commerce, audience insight and media activation in a way few other channels can, but unlocking that opportunity requires a shift in mindset.
Retail media shouldn’t sit in a silo owned by shopper marketing or ecommerce. It should be integrated into the broader media planning and effectiveness agenda. That means connecting retail media investment with brand strategy, consumer & media planning, creative and measurement.
The long game
There is understandably a rush to monetise retail audiences, but the next phase of retail media should be less about how quickly the industry can create new inventory and more about how effectively it can build a sustainable ecosystem.
For retailers, that means creating propositions that deliver genuine value for brands rather than simply adding another revenue line. For brands, it means demanding greater transparency, comparability and accountability. For agencies, it means joining the dots, and for the industry, it means accepting that growth and maturity are not the same thing.
Retail media has already changed the media landscape; now retailers need to decide what kind of market they want to build. One where every network competes to capture an increasing share of budgets, with brands left to navigate the complexity between them? Or one where retailers compete fiercely on differentiated consumer and commercial value, while collectively making the market easier to plan, buy and measure?
The future of retail media should be a more connected ecosystem, because the real prize isn’t another retail media network; it’s earning the confidence of the brands funding the category.
Get it wrong, and the industry risks creating a media marketplace that is incredibly sophisticated but increasingly difficult for the people funding it to navigate.
Rob Edwards is head of media and digital at Arla