What is the key to unlocking in-store retail media?
Although digital retail media provides retailers and advertisers with a broad reach platform, in-store retail media is showing greater potential in influencing consumer purchase decisions. 84% of retail sales still occur in physical stores, prompting retailers to accelerate the deployment of technologies such as tasting kiosks, digital endcaps, cooler screens, and smart shopping carts. However, measuring advertising effectiveness, protecting consumer privacy, and integrating applications with screens have become key issues for the industry's advancement.
Digital retail media offers retailers and advertisers an unprecedentedly broad stage to reach consumers. However, this vast platform does not necessarily translate into significant impact when influencing customer purchasing decisions.
Over the past few years, the grocery industry has accelerated its retail media efforts, with digital technology taking center stage in 2023, while in-store capabilities have become the focus this year.
Recently, retailers, advertisers, and industry experts have noticed that despite the many digital technology possibilities, in-store retail media is having an increasingly prominent impact on consumers.
According to a report released in July by in-store advertising provider Vibenomics, 84% of retail sales still occur in-store, making the potential of in-store retail media more critical than ever.
Kevin Bridgewater, senior vice president at retail media company Quad, said in an interview that advancements in in-store retail media are especially beneficial for regional and mid-market retailers, as these smaller retailers can more clearly articulate their customer base to CPG partners and explain why product messaging can be beneficial.
"For these smaller retailers, website traffic is not enough to spark brand interest, but foot traffic is quite substantial," Bridgewater said.
Grocers leverage in-store retail media capabilities to track shoppers' movements within the store and link them to shopping baskets and purchasing behavior, a capability that is crucial. Impressions (indicating whether customers saw the ad) and influence (tracking whether the ad drove a purchase) are both essential for grocers and CPGs to understand campaign effectiveness.
Measuring impact
Experts say every area of the grocery store can be equipped with in-store retail media, with these devices strategically placed to maximize impact and gather more shopper data.
Sampling kiosks
The first type of retail media technology shoppers may encounter is sampling kiosks, allowing customers to discover new products as soon as they enter the store. Gil Phipps, senior vice president of global client solutions at Advantage Solutions and former chief marketing officer of Sprouts Farmers Market, said in an interview that sampling kiosks are typically located at store entrances and are often interactive. This interactivity is crucial for measuring the impact of advertising messages.
Wakefern Food Corp. was one of the first companies to broadly deploy interactive sampling kiosks in 2023, installing devices in 95 ShopRite and The Fresh Grocer stores. These Freeosk-powered devices dispense product samples after shoppers scan with their phones, allowing the system to collect data and observe whether trials lead to purchases.
Phipps noted that while sampling kiosks offer a direct method to showcase advertising campaigns and collect shopper information, their main drawback is their distance from checkout and primary product displays, especially compared to retail media messages that are more integrated into the store layout.
"Messages at the entrance are important, but not as powerful as showing cereal messages on the cereal aisle; of course, the closer you get to the product and the point of purchase, the stronger the effect," Phipps said.
Digital end caps and vertical banners
As shoppers venture deeper into the store, they may encounter digital end caps. These end caps are located at the ends of aisles and are primarily used to draw customer attention to featured products, such as limited-time seasonal items or everyday staples.
Once consumers enter the aisle, vertical banners—smaller screens attached to shelves designed to direct shoppers toward specific products—will capture their attention.
These aisle-focused in-store retail media tools typically employ the same measurement strategies and technologies.
In April, The Save Mart Companies began rolling out in-store retail media technology as part of the launch of its In-Store Connect network, powered by Quad.
Bridgewater said in an interview that to measure ad performance, Quad collects transaction logs from retail partners, including The Save Mart Companies, to measure category-level SKU performance for participating brands.
The end caps, vertical banners, and other aisle screens provided by Quad determine impressions through "shopper trap encounter technology," Bridgewater said, which senses and measures shopper movement in the store. The company then combines transaction and SKU-level data with impressions for analysis.
Bridgewater said Quad then conducts A/B tests, also known as split tests, to track awareness, comparing results from stores in the network to those in the same chain not participating in the network.
Cooler screens
Grocers can also bring retail media to refrigerated doors. Technology and retail media company CoolerX, formerly known as Cooler Screens, offers digital refrigerator and freezer doors that display ads and product information and allow shoppers to interact with digital items.
The company's chief data and product officer, Artem Lavrinovich, compares this interaction to consumers clicking on digital ads. For retail partners, CoolerX uses sensors on the screens to provide shopper behavior insights, including their distance from the screen, dwell time, and how many people are viewing. This information, along with store transaction logs, is timestamped, enabling CoolerX to understand the connection between displayed ads and shoppers' baskets.
Lavrinovich said that if a customer stands for a long time in front of a CoolerX door screen, the company can push ads designed to influence their purchase choices, such as highlighting popular items being viewed behind the refrigerator door or showing QR codes that provide additional information or offers.
"The sensors are not just used to count how many ads were played and dwell time and distance; they are actually used to identify where the customer is in their journey," he said.
Smart carts
Smart carts are a way for grocers to consolidate nearly all in-store retail media functions—pushing ads, personalization, in-store app features, loyalty program promotions, and digital screens—into a single device.
Although not yet as widely deployed as digital screens, smart carts are gaining popularity among grocers.
E-commerce provider Instacart is making a big bet on smart carts, with its screen-equipped Caper Cart expected to have "thousands" in supermarkets by the end of 2024, CEO Fidji Simo said in May.
As in-store retail media evolves, so do Caper Cart's capabilities. In January, Instacart launched ads on smart cart screens and piloted the feature at Good Food Holdings stores. The feature enables CPG brands to engage customers with ads during the shopping trip and deliver more personalized content based on past purchases and in-store shopping behavior, Instacart said in an email announcement about the technology.
Because smart carts are a newer type of in-store retail media, their measurement capabilities are less standardized than fixed screens. In emailed comments, Instacart did not detail Caper Cart's measurement capabilities.
What limits in-store retail media technology?
Although grocers can unlock deeper shopper behavior insights through newly acquired retail media capabilities, experts note that progress is often hindered and the technology itself has limitations.
For example, while smart carts may be the next wave of in-store retail media technology, Phipps worries they could limit shopper spending. Since carts can hold a limited number of items, Phipps is concerned that some special features, such as calculating totals before checkout, may fail if shoppers exceed capacity.
However, more pressing for consumers is that grocers may invade privacy as they further personalize the shopping experience.
CoolerX, Quad, and Grocery TV say they currently do not capture or record personally identifiable information such as gender, age, or race, instead relying on impressions to measure ad impact.
To dwell or not to dwell
Dwell time is one of the most commonly measured metrics in in-store retail media technology. While some experts claim it is a key way to track customer engagement, others consider it less reliable.
According to Phipps, dwell time is a comprehensive measure of impressions because it captures how many customers pass by the ad and how much time shoppers spend in front of it. This information can be combined with store transaction logs and time of day to indicate ad performance.
However, Bridgewater noted that Quad considers dwell time insufficiently accurate for measuring an ad's impact on shoppers or collecting impressions.
"We don't think there is an accurate way to measure dwell time to convey to brands that they actually engaged with the media," he said. "[Shoppers] might be looking at the product, might be looking at something else, or might stop to look at their phone."
Grocery TV CEO Marlow Nickell and head of data and analytics Dallas Griffin noted that the company tried measuring demographic data on devices about five years ago but "quickly abandoned" it due to inaccurate results. Now, the company relies on third-party audited impressions through a partnership with Placer.ai.
Lavrinovich noted that CoolerX's technology is similar to a radar system, sensing human presence without collecting demographic details, while Quad measures ad impact based on impressions, SKU-level sell-through, and retailer transaction logs.
"There are no cameras on our devices, and there are no plans to install them. Our belief, and my personal belief, is that would cross the line of customer expectations," Bridgewater said, noting that collecting demographic information would raise consumer privacy concerns.
Looking ahead, leveraging retailers' apps may be key to unlocking in-store retail media.
Retailers' apps are "the most powerful in-store media surface," combining first-party data and in-store traffic insights, said Jordan Berke, founder and CEO of Tomorrow Retail Consulting and former Walmart e-commerce executive.
"When consumers use the app in-store, the potential for personalization, monetization, and providing brands with highly targeted engagement opportunities is significant," he added.
According to Berke, the next step in in-store retail media development is combining the power of apps with in-store digital screens to provide customers with the most personalized shopping experience. This development will involve enabling in-store screens to recognize when a customer's app is nearby and displaying product ads and store information tailored to their specific needs on aisle screens.
However, to reach this point, retailers need to convince customers to trade privacy for personalization, but Berke believes customers will be willing to accept this trade-off.
"This is not a given, nor is it a low-hanging fruit opportunity," Berke said. However, the industry has "seen time and again that if retailers can demonstrate and consistently deliver value, customers become comfortable with this exchange of [personal information]," he added.
Connecting in-store screens with apps will also improve metrics—particularly incremental return on ad spend (iROAS)—for grocers' brands and advertising partners, Berke said.
Measuring iROAS requires precise attribution and control group creation. However, currently, grocers' in-store screen metrics are "loose" and cannot provide the highly detailed data advertisers seek, according to Berke.
For example, Quad is preparing to launch a feature that allows people to opt in to link their retailer loyalty app to receive personalized offers such as coupons, Bridgewater said.
"Being able to precisely reach in-store customers is significant... [Previously] you couldn't reach them in that prime environment when they are ready to make a purchase decision—until now," Bridgewater said.