Why You're Seeing So Many Ads In Your Local Supermarket

It's not just you. There are actually a lot more ads now targeting us while we shop for groceries.

Video screens are mounted in aisles, at the checkout and in many more spots, promoting discounted sales offers, sometimes even sharing recipe ideas. Some of these promotions might be helpful for us as shoppers, while others might just be adding the sensory overstimulation of the supermarket experience.

It's all thanks to the rise of "retail media," a booming trend in advertising. The term refers to ads designed for and delivered in the retail environment. A recent report from GroupM pegs retail media as one of the fastest growing ad channels, predicting that it will see $125.7 billion in revenue this year. If this growth continues for the next five years, advertisers will spend more on reaching you while you're shopping than they'll spend on reaching you while you're watching TV.

The most successful retail media networks (RMN) are fully digital ad delivery platforms focusing on e-commerce. The two biggest examples of RMNs can be found on Amazon and Walmart's websites. The ads you see on various product pages while you browse are served by the RMN, similar to the way Facebook or Instagram shows you ads.

Instacart, the grocery delivery giant, reported a total of $740 million in ad revenue in 2022, representing a rise of 30% over 2021 and close to half of the revenue that the company brought in from actual grocery orders.

Retail media's popularity is driven by the need for brands to reach consumers close to the point of purchase, so their ads arrive in the relevant context — when you're in product browsing mode, already with the intent to buy something. "I call it the next major media channel," Andrew Lipsman, principal analyst for Insider Intelligence, said.

In-Store Retail Media Boosts Revenues

Brick-and-mortar retailers have expenses that don't apply to e-commerce in the same way, like the need to pay for floor space and customer-facing staff. With supermarket profit margins as slim as they are, it makes sense that business leaders would want to find additional ways to earn. This is why RMNs aren't staying online, giving rise to those in-store ads you're seeing more of.

Point-of-sale promotions have been around for ages in simpler forms like signs on the edge of shelves telling you about "buy one get one free" offers or voice announcements about the special offer in aisle three, but retail media is more sophisticated.

Video screens and large-scale digital displays are blurring the divide between digital and physical. People already shop online and pick up in-store, or compare prices online while in a physical store. Now digital ads are permeating brick-and-mortar shopping experiences.

For example, Amazon launched digital signage ads in Amazon Fresh stores in October last year and plans to implement them in all Whole Foods branches soon. Microsoft is rolling out an in-store retail media platform called PromoteIQ In-Store, having recently operated in partnership with Kohl's and Kroger.

Adding Value to the Shopping Experience

Digital in-store ads deliver product information such as menu ideas, nutritional details and allergy risks in ways that are easier to read and understand than tiny print on the side of a package. Consumers can view interactive product demos, and if they're logged in to a smart cart system, they can use gestures to interact with touchscreens serving up personalized content, which can't be done with paper signs.

This opens up more capabilities for in-store retail to surface offers that are optimized to appeal to the individuals viewing the promotions. For example, if a shopper places a pack of cheese in their smart cart, they might see an ad on the screen informing them that the second pack of cheese is available at half price.

Retailers can send timely push notifications based on purchase history, like, "Last time you were here you bought a six-pack of Coors – did you know there's a special offer on Coors this week?"

"When in-store retail media is done right, it adds value to the customer experience," Yaron Toren, who leads retail media at smart cart provider Shopic, said. "Ads don't have to be intrusive or annoying. We've seen highly positive responses to ads that remind a customer about a specific promotion when they are located in the relevant part of the store."

With this approach, according to Toren, Shopic has seen sales offers with 30 to 50% conversion rates. As a benchmark for comparison, e-commerce ads rarely see conversion rates above the single digits.

Engaging, Trustworthy and Relevant

When done right, retail media ads can significantly add entertainment and enjoyment to the shopping experience. Digital signs are growing bigger, and video ads are increasing, offering improved storytelling capabilities using dynamic content, more interactive experiences and added methods for brands to engage with customers.

In the near future, we can expect to see the adoption of augmented reality (AR) media ads in the physical retail environment, leading to richer shopping experiences. Stores are developing new ways to engage with consumers through demos, events and interactive screens to create customer-centric media experiences.

In contrast to online ads, in-store retail media is still trusted by consumers. The Amazon website's sponsored product ads might come across as deceitful trickery to many shoppers, making them suspicious of the broader majority of online digital ads.

"Online retail media ultimately winds up making the consumer experience worse — with online ad placements going to the highest bidder instead of delivering search results based on relevance," Broadsign's Quinn Mason said. "In-store retail media is still based on improving the in-person shopping experience."

In-Store Retail Media Is a Force To Be Reckoned With

There's a good reason why you're seeing so many more ads in your local supermarket and big brand stores. In-store retail media is emerging as a win-win-win approach to retail advertising, providing consumers with valuable information and offers, brands with effective ways to reach their audience and retailers with the revenue stream they need to stay in the black.

Ralph Tkatchuk is an e-commerce data security specialist and a long-time contributor to technology magazines.

(Opinions expressed in this article are the author's own.)