Gary Butterfield Cvqvj4Kht G Unsplash
Retail Insights

How a Retailer’s Sector Impacts its Ability to Generate Media Revenue

Any retailer can become a media owner. With each one having the same opportunity available to them.

Sam Knights Min Written by Sam Knights on 17 Jun, 2020

As our high streets open their doors once again and the economy starts to re-build in the wake of a global crisis that has shaken the nation, there has never been a more important time for retailers to consolidate what they can control.

One way that retailers can though, is to become media owners. It’s not a new concept, with retailers in varying retail sectors well versed in the notion – and successful at that. But it is one that hasn’t been fully utilised… Yet.

Any retailer can become a media owner. With each one having the same opportunity available to them.

However, there are a number of factors that impact the potential size of the prize and one of the most important variables is the sector a retailer is in. Why?

Well firstly, the performance of the retail sector in question makes a significant difference to whether supplier brands want to invest in marketing or not. Typically, brands will invest their marketing spend where shoppers are, driving growth to get ahead of the curve and see the highest returns.

If the sector is in growth, the revenue potential therefore goes up – and vice versa for a sector in decline.

Some sectors are more mature than others and have been well versed in the notion of becoming media owners for some time, successfully generating considerable sums of Shopper Media revenue. One such retail sector, is the Grocery sector.

We estimate that the U.K. Grocery sector is currently* generating upwards of £300m annually in Shopper Media revenue. A figure that is not only transformational to the bottom-line for retailers experiencing market pressures on performance, but also a figure that helps drive top-line sales revenues.

The Grocery sector has been steadily growing in recent years, but in the wake of the Covid-19 outbreak, is estimated to grow by 7.1% by the end of 2020. Inevitably, this will make Grocery retailers’ media platforms even more appealing to supplier brands – particularly to those brands in thriving categories amidst the pandemic, looking to maintain demand at point of purchase.

With the Grocery sector being so well established in supplier co-marketing, the sector already has systems in place to attract this revenue. As a result, brand marketing structures have evolved over the years, acknowledging the importance of advertising to shoppers at point of purchase.

However, it is not only the growth of the retail sector that determines its importance. If an individual retailer is in growth – even if its sector is in decline – the potential revenue opportunity could be higher still, understanding that their media platform offering naturally becomes more valuable.

For example, the Fashion sector has been served some heartbreakingly heavy blows by the Covid-19 pandemic, but demand in activewear and home gym equipment for at home workouts has instead increased. Specialist retailers able to cater for the surge in demand for fitness apparel and equipment, suddenly become more valuable as media owners, with supplier brands able to advertise their products to engaged shoppers at point of purchase, capitalising on the demand.

For those retailers not in growth, all is not lost. It is still possible for any retailer to become a media owner and generate revenue through Shopper Media.

It is a perpetual truth that for a prospective buyer to become a consumer, there is one touch point that is most influential – the point at which they buy the product. This is the unique opportunity that retailers offer brands and therein lies the value.

As we recover together, we all need to find new ways to grow. Good luck.

*Data collected and recorded in January 2020, prior to COVID-19 outbreak.

**Recognised retail sectors include: Grocery, Electricals, Pubs & Hospitality, Home & Leisure, Pharmacy & Beauty, Specialist (e.g. Toys, DIY, Fashion, Sport and Convenience).