HOW DO BRANDS UNDERSTAND retail media scale as they plan spending?
In previous articles in this series, we addressed the challenges CPG brands face in dealing with retail media networks. It summarized brand marketer spending trends and described why brand teams are challenged when it comes to making decisions about retail media investments across their entire distribution networks.
We discussed the struggle brands face as they endeavor to support their retail distribution networks with proportional retail media investments across all their distribution channels. With hundreds of small retailers seeking a fair share of the pie, CPGs simply don’t have the bandwidth for empirical decision-making.
Regional and independent retailers are not the only ones concerned about the concentration at the top of the Retail Media Network hierarchy.
CPGs are also wrestling with this, and the conversation is beginning to bring trading partners together in search of workable solutions which enable a fair share of retail media spending to find its way to numerous retailers who are not on the top-ten RMN list.
“The network is the piece that’s missing.”
– Adam Zimmerman, Ideal by Design House
At the handful of larger retailers where retail media is a must, joint business planning discussions have become more complicated, as CPGs work to establish new practices that incorporate traditional trade marketing along with the type of targeted messaging that retail media enables. Negotiations must now address how outcomes can be measured and what merchandising support will be required in the stores and fulfillment centers.
Needed: “Connective Tissue”
At February’s 2025 NGA Show in Las Vegas, two panel sessions were devoted to the existential challenge faced by independent grocers as they seek sufficient retail media scale (i.e., audience size) to be relevant to national brands. Wholesalers and retailer networks represented at the conference discussed their efforts to deliver targetable shopper audiences with sufficient scale and measurability to justify CPG investment.
CPGs face a great deal of pressure to show a measurable return from their retail media investments, said panelist Chris Richmond, Regional Vice President Industry Affairs, Post Consumer Brands. “We have bosses, too, and they want to see, OK you spent this money? Show us what you got for it.”
He implored RMNs to “reduce as much friction as possible” to help CPG brands engage. “We know it is critical to execute against the audiences that make sense to our customers.”
Panel moderator Adam Zimmerman, co-founder of Ideal by Design House, reminded the attendees that so far, “A very tiny amount of retail media dollars are being spent with independent retailers.”
The company partners with 16 major wholesalers and regional chains to distribute highly-targeted ads via customized digital circulars to 25 million grocery shoppers through their store apps. Each shopper receives a unique personalized set of offers, and advertisers distribute and track them from a single platform.
What’s largely lacking today for independent retailers is what Zimmerman called “connective tissue” that can link thousands of smaller and independent grocery stores into a cohesive whole. “The network is the piece that is missing,” he said.
Amy Davis, Vice President, Industry Relations at Kellanova, said her company also has felt challenged to match up its sales objectives across a plethora of smaller retail partners with emerging retail networks. These may range from launching a new product and getting it out to market, to driving awareness for established brands.
“A part of my current industry relations role is really starting to understand what those capabilities are out there across the networks,” she said. Kellanova is working with wholesalers and independents to understand their varied capabilities. “We focus our internal stakeholders so that we can bring our resources to bear and make investments where we’ll get those returns.”
Retail Media Scale and Alignment
Panelist Matt Eckhouse, President of Professional Services at UNFI, the natural foods distributor, said his organization views retail media as essential for its future. “We expect retail media will be core to what we do as much as distributing groceries.” The company’s goal: “We want to reach 100 million households.”
IGA Inc. the world’s largest voluntary network of independent supermarkets, has been pursuing retail media scale for the past year through an alliance with Instacart, the shopper delivery service, leveraging its “connected store” platform.
Interviewed at the NGA show, Michael La Kier, IGA VP Brand Development, described what he called a “halo effect” that can arise when retail media networks are beneficially aligned with their stores’ merchandising efforts.
IGA has considerable scale to offer, with operations in 46 of the United States and over 25 countries, and aggregate worldwide retail sales of over $43 billion last year through its 6,300 stores globally. “Our retailers can’t be forced to comply. They need to be shown how their efforts contribute to retail media successes,” Kier said.
Glenn Figenholtz, Sr. VP Merchandising, Lowes Foods, another panelist at the NGA Show, also emphasized the interconnection between retail media and other levers that brands and retailers may operate to drive sales and profits in retail stores.
“What is the price? How is the product displayed? It’s important to understand the impact of all the different spends, and ask ourselves, ‘What types of disruptions do we want to create for the shoppers in our stores?’” he said.
Essential Measurement
Panelists Grant Lunde, Digital Marketing Director, C&S Wholesale Grocers, said his company was charting a path to retail media participation for the retailers it serves. “You need the right digital tools. The right feedback loop. You have to connect and measure. We are putting the rails in place for them to execute retail media.”
Lunde added that C&S works with its retailers to coach them on the minimum requirements. “Scale matters. It is hard work to do this.”
Several panelists noted that the metric, IROAS (Incremental Return on Advertising Spend) is emerging as a crucial metric for CPG advertisers; that is, are their programs actually lifting sales?
Said Amy Davis of Kellanova, “We’re assessing how retail networks measure up. Do they bring new users to our brand? Help us meet our brand objectives? Do they have capabilities to appropriately share first-party data, such as a clean room?”
“The goal for brands is return on their investments. Retail media networks are not simply a way for independent retailers to capture more brand dollars,” said Zimmerman of Ideal. “Unless you build it, they won’t come.”
This is the third part in a series. Republished here by permission from CPGmatters.