Why retail media is a boardroom-level conversation for retailers

Fresh research from Bain & Company shows consumers across the U.S. and Europe are still feeling financial strain. As a result, retail sales growth forecasts are muted, and retailers face another year of tight trading conditions, especially in grocery.

In my executive meetings with European retailers, one question keeps surfacing: How do we keep investing in what customers care about — discounts, loyalty rewards, convenience — when profit margins are razor-thin?

Look at the numbers. Major German, French and U.K. grocers report operating margins between 1% and 3%. Loyalty card programs alone often equate to roughly 1% in cash value. Add home delivery and marketing costs, and you’re quickly operating on thin margins.

In that context, the strategic significance of retail media networks (RMNs) becomes very clear. They are not a nice-to-have revenue stream. They become critical to providing the shopping experience that customers are asking for.

This isn’t a media team conversation. It’s a boardroom one.

The Amazon problem

Amazon’s continued growth of the consumers’ share of wallet remains a threat to traditional retailers. Amazon’s economic model is fundamentally different. Its profitability is supported by diversified, high-margin businesses such as Amazon Web Services. They can afford to subsidize in ways that traditional retailers simply cannot. in ways that traditional retailers simply cannot.

But traditional retailers have physical stores, e-commerce platforms and rich loyalty datasets. They have a broader view of the market. This gives them the opportunity to leverage existing infrastructure to win by building scaled and high-margin RMN businesses.

In practice, Amazon captures a disproportionate share of RMN revenues than its current share of wallet would justify. The imbalance is stark. In the U.K., Amazon’s captures roughly 13% of retail spend, yet commands around 73% share of retail media spend.

But that delta, while concerning, is an opportunity for every retail CEO. The execution gap is what’s costing the industry.

What winning actually requires

Retail media is often described as monetizing existing assets: loyalty card data, purchase history, digital traffic, footfall. That’s true — but incomplete.

The real shift is organizational. Retailers must operate like media businesses, not retailers with an ad bolt-on.

That means:

1. Serving diverse advertiser needs. Some advertisers will need hands-on support with managed campaign delivery. Others will want direct access to use data consistent with the retailer’s rules. Many want to extend retail media beyond on-site search ads into connected TV inventory and off-site activation to drive upper-funnel brand outcomes.

2. Delivering outcome-based measurement. Advertisers increasingly optimize their investment with a retailer’s RMN against other parts of their media plan. If that measurement doesn’t happen in the same place campaigns are executed, spend will stay limited. Comparable, third-party, outcome-based measurement is essential.

3. Breaking down on-site silos. On-site inventory remains core. But this inventory has historically been bought in a silo without standardization. As IAB EU research concludes, “challenges such as the fragmentation of retail media networks and the lack of standardisation are significant barriers for nearly 60% of buyers when considering investing in retail media.”

Advertisers increasingly expect to buy on-site and off-site from a consolidated buying platform, optimizing across the entire purchase funnel — not stitching together isolated placements.

Retailers that enable buying across the open internet — where consumers spend roughly two-thirds of their digital time outside walled gardens — move closer to Amazon’s capabilities.

Some are acting already. British beauty and wellness leader THG PLC recently opened its data for activation on The Trade Desk, joining retailers such as Tesco, Schwarz and many more.

Protecting the margin

Most importantly, retailers must minimize incremental operating costs when building their RMN propositions. Retail media’s rapid growth — with IAB Europe forecasting 20% annualized growth in European retail media spend until 2028 — has triggered a wave of new ad tech intermediaries and long-standing companies pivoting to retail media. tech intermediaries and long-standing companies pivoting to retail media.

Many of these providers charge substantial fees for capabilities such as audience curation, AI-based optimization, identity and permissioning — features that are sometimes redundant or already available at no additional cost.

This cost sensitivity is a key reason retailers need to carefully consider their tech stacks — and also why we increasingly see retailers collaborating to build consolidated retail media propositions that scale revenue without layering on unnecessary expense.

The window is now

The signal from retailers’ earnings is clear. Tesco and Carrefour both highlight retail media performance. Looking across the pond, as Walmart becomes the first $1 trillion retailer, advertising revenue grew 46% last year based on its latest earnings.

Put simply, retailers have a clear right to win, but their RMN strategy is critical. Now is the time to review and renew that strategy and execute on it.

The Current is owned and operated by The Trade Desk Inc.