Retail Media Strategy and Other Tactics to Overcome Competition in Retail

eCommerce transitioned from one of the sales channels to becoming integral to consumers' everyday lives. In 2023, shoppers spent $5.8 trillion on digital purchases worldwide. According to Statista, this number is set to hit $8.1 trillion by 2027.

Retailers have also acquired a large share of sales gains. However, there are snags. One is that retailers face pressure from established players who have taken a substantial portion of shoppers' money. Another is that they must go above and beyond to capture consumers' attention, whose expectations have risen to unlimited heights.

High-performing retailers understand these challenges and invest in innovative ways of reaching customers, attracting consumer attention, and standing out. At the same time, this market also welcomes new entrants working on next-gen omnichannel retail media solutions. The evolving state of the niche further complicates the competitive situation and forces retailers to catch up quickly with flexible strategies.

Which of them will drive tangible results and long-term growth? Let's examine the core strategies to guide your business through the competition and optimize your retail opportunities.

Expand Media Capabilities

Who could forget how Amazon disrupted digital commerce with seamless ad integration into the customer experience? By 2024, Walmart, eBay, Alibaba, and other retail giants have caught up. Top retail goliaths invite advertisers to serve creative assets on their high-converting “digital shelf” spaces. They earn advertising dollars by offering brands exclusive access to valuable digital properties and first-party data.

Within the next two to three years, retail media is likely to become a booming territory for advertisers. The recent Dentsu Global Ad Spend Forecast projects that the ad spend in this niche will increase by 32% (year on year). The total retail media ad financing is set to amount to $153.3 billion, as noted in the WARC forecast.

Optimistic forecasts on retail media investments and increasing ad spending signal to retailers that competition will only intensify. To survive in the coming years, retailers must ask themselves, “What is a retail media strategy?”

Businesses benefit from operating a balanced retail media strategy in the following ways:

1. Add new revenue sources by selling first-party data and pre-built audiences to partners;
2. Use advertising income to improve core business operations;
3. Increase ad opportunities for brands;
4. Boost conversions and increase sales with targeted ad campaigns;
5. Optimize the performance of marketing efforts, etc.

Analyze the Competitive Landscape

Competitor analysis is a powerful tool for staying afloat with industry-wide trends, new technologies, and shifting consumer preferences. Retail businesses must track and analyze their competitors’ marketing, sales, and retail media strategies. Otherwise, they may risk falling behind the pack.

• For example, Walmart’s competitive analysis revealed that its top contenders launch frequent sales with decreased prices for selected products. The retail giant created an “Everyday Low Prices” strategy and attracted tons of cost-aware customers looking for affordable purchases online.
• Target’s investigation into competitors showed that Amazon offers new advertising options: sponsored products, in-store promotions, and native ads. This retailer responded by serving highly targeted display ads on Target.com and external websites and apps by leveraging off-site programmatic media. For instance, Target spreads its campaigns to trusted sites like USA Today and Conde Nast.
  Target also launches cross-channel campaigns and leads the industry with a high-performing search and social media strategy for retail. The company actively serves retail media ads on Google Search or social media apps like Instagram.

Data analysis lets retailers discover the strengths and weaknesses of their direct competitors. For instance, they can experiment with new ad formats when they see successful examples of their application in other campaigns.

Here are other benefits of competitor analysis:

1. Discover new trends and successful strategies;
2. Contrast your results to that of your peers;
3. Identify unique selling points that prevail in the market;
4. Detect underserved audience segments;
5. Respond to user behavior changes in the same way as competitors, etc.;
6. Optimize advertising budgets based on competitor insights;
7. Plan campaigns around competitor promotions.

Invest in Data-Driven Decision Making

Retailers operate Big Data pipelines as they collect vast amounts of information in their daily operations to have an overview of customer behavior, performance metrics, inventory level, etc. However, their competitive advantage is how well they convert the data into actionable insights. Otherwise, they may fall behind in making informed decisions regarding sales and marketing campaigns, inventory management, and customer service.

How can retailers unlock the value of the data to improve the decision-making process?

• Develop a first-party data strategy

Despite retail businesses dealing with different data sources and types, first-party data has become the primary source of insights into their target audiences. Even though the advent of the cookieless era has been postponed, the world quickly acknowledged the decline of third-party cookies. 

This change means retailers must prioritize safe and compliant personal data aggregation and use methods. They must also implement a transparent data collection system, obtain informed consent, and protect data from misuse.  

First-party data collection empowers retailers to segment audiences based on purchasing patterns, demographics, interests, and preferences. That information becomes the backbone of personalized marketing strategies, improving a customer's experience.

• Use predictive analytics tools

Predictive analytics focuses on leveraging historical data to optimize long-term strategies. Retailers use these tools to analyze past consumer behavior, sales trends, competitor offerings, market trends, etc. Obtained insights help retailers optimize business operations and improve the outcomes of marketing efforts:

• Detect supply chain roadblocks;
• Set dynamic prices;
• Adjust inventory levels;
• Segment audiences;
• Forecast future demand based on past order fulfillment data, etc.

Retailers should also rely on advanced tools to facilitate real-time data-driven insights. This strategy enables retailers to respond to current market conditions, customer behaviors, and inventory levels as they happen.

Prioritize Personalization and Customer Experience

Over 80% of consumers prefer companies offering a personalized experience. For retailers, this insight means leveraging customer data to tailor their offerings, meet individual needs, and create engaging user experiences.

Fierce competition for attention also pushes retailers to stand out through targeted and relevant messages. With a myriad of shopping destinations available through the web, retailers need to focus on personalized marketing strategies that cut through the noise and capture more consumer attention with tailored customer experiences (CX).

What helps achieve the goals of personalization and excellent CX?

• Customer Data Platforms (CDPs) and AI-driven recommendations

Adding a CDP to your tech stack ensures your retail strategy has the right infrastructure to activate first-party data. CDPs combine customer data from multiple touchpoints to create unified profiles and segment audiences based on common attributes (demographics, purchase history, browsing habits, interests, and preferences).

Collected insights are then used to craft personalized messages that align with the interests and behaviors of the target audience. AI-driven recommendation engines help a lot in this regard. AI automates the personalization process, assisting retailers to deliver scalable experiences. The efficiency guarantees accurate recommendations across various customer touchpoints.

AI can also predict future buying behavior from past interactions. This enables retailers to head the customers toward a product or promotion that aligns with their future needs, basically walking them down the sales and marketing funnels.

• AdTech platforms

As critical instruments of a retail media advertising strategy, AdTech platforms help deliver hyper-targeted marketing campaigns on retailers’ properties and broader digital ecosystems:

1. Promote brands via retail media ads and content tailored to audience expectations. They can also use first-party data to target customers with ads across external websites. 
2. Integrate marketing efforts across multiple channels by synthesizing all available data points.

Embrace Omnichannel Retailing

Gone are the days when consumers visited physical locations to buy products and interact with specific brand promotions. According to the latest findings, 73% of users switch between three or more devices during shopping. They expect consistent messages at every touchpoint, leading them to checkout in-store or through a digital sales channel.

Retailers must seamlessly integrate an omnichannel and cross channel retail media strategy to stand out among competitors. This approach enables them to offer superior customer experiences that respond to shifts in shopping behavior. Retailers build long-lasting relationships with loyal audiences by giving consumers high-quality support and uninterrupted interaction throughout the journey.

How do we succeed with an omnichannel retail strategy?

• Integrated online and physical channels help retailers outperform competitors by providing convenient shopping experiences spanning a series of interactions. Multiple strategies help achieve this goal. For instance, retailers may consider the following options:
  • Click-and-collect services encourage online audiences to stop by offline stores to pick up their online orders. Apart from offering flexibility to customers, this approach helps generate additional in-store buys, including impulse purchases.
  • Real-time inventory trackers help customers access accurate in-stock statuses, regardless of whether they shop online or at a brick-and-mortar store. 
  • Cross-channel promotions at checkout drive sales across different platforms. Based on customer preferences, retailers can provide online and offline redemption options.
    
• Comprehensive email and retail social media marketing strategy also contributes to an efficient omnichannel approach. A solid retail social media strategy helps brands connect with their target audience and build a community. Personalized email marketing campaigns, in turn, enable retailers to engage with high-performing audience segments and retarget occasional shoppers with tailored promotions.
  
• Retail media networks (RMNs) naturally fit into the omnichannel framework as they help merge online and offline marketing efforts. These platforms unite all channels a retailer owns and use consumer insights to tailor messages to target audiences. For some brands, including those selling Consumer Packaged Goods (CPG), an RMN provides the necessary tools to serve highly relevant mass advertising campaigns. The platform is instrumental for reaching the objectives of a CPG retail media strategy as it also bridges the gap between online and offline shopping experiences.

RMNs contribute to efficient omnichannel strategies as they enable businesses to:

1. Create new revenue streams by efficiently monetizing online and physical ad inventory;
2. Develop new advertising formats to attract the attention of foot traffic and online shoppers;
3. Access and engage digital and in-store audiences in every stage of the shopping journey;
4. Identify and target in-store customers based on actual behavioral, demographic, and other types of contextual data;
5. Personalize advertising and shopping experiences using retailer’s first-party data from past interactions;
6. Maintain consistent brand messaging across every touchpoint;
7. Measure the impact of omnichannel retail strategy and make informed decisions about product options, positioning, and promotions.

Innovate Constantly and Remain Agile

A fiercely competitive environment requires retailers to constantly adapt to evolving changes and incorporate new and emerging capabilities into their offerings. This is a critical strategy for becoming and staying relevant to consumers' ever-changing expectations.

These emerging technologies will further enable retailers to drive operational improvement, enhance customer engagement, and make decisions:

• Artificial Intelligence (AI). As we already mentioned, AI-driven recommendation engines can foresee consumer preferences and suggest certain products in a personalized manner at scale. AI-powered check-out systems and chatbots simplify customer service and improve productivity.
• Machine Learning (ML). Machine learning helps process large volumes of data and identify patterns in consumer behavior. The technology enhances decision-making by giving insights that enable retailers to predict market trends and demand fluctuations.
• Internet of Things (IoT). IoT-enabled devices, like smart shelves or beacons, can track inventory levels in real-time. They also allow for a personalized in-store experience through location-based offers and promotions to customers.
• Blockchain. Blockchain helps retailers bring transparency and safety into their operations. The technology excels in detecting counterfeit products, encrypting sensitive information, and tracking supply paths. 
• Automation. Automation streamlines mundane tasks, such as processing orders, tracking inventory, or invoicing.

Retailers should also consider migration to cloud-based systems and modular software architecture to keep their platforms scalable and flexible. Businesses with an IT infrastructure tailored to their future needs will be ahead of the game since they remove technical bottlenecks from the equation.

Nurture a Network of Strategic Partners

One of the core drivers of business expansion in any niche is strategic partnerships. Retail is no exception. The right pool of partners will help retailers to:

• Onboard new technological capabilities easily. Retailers can cooperate with:
  • AdTech providers to improve targeting, data analysis, and campaign orchestration. They can also help develop or license advanced platforms powering digital advertising: Demand- and Supply-side platforms, DMPs, Ad Servers, and others.
  • Marketing platforms to advance with omnichannel strategies, loyalty programs, content creation, etc.
  • IT consultants to identify major technological initiatives for consecutive adoption.

• Differentiate their brand with mutually beneficial offers

Co-branded campaigns and cross-industry collaborations further help retailers distinguish their brands within a competitive market. Complementary brands, in return, can share their unique audiences and offer experiences that raise the bar of brand positioning.

Say a fashion retailer cooperates with a tech startup to introduce its line of bright clothes. As a result, they market it to new audience segments ( e.g., tech-savvy customers). Simultaneously, a retailer offers an innovative product to its current database of customers. It can promote a brand through online/in-store ads or the channels within a retail social media marketing strategy.

Consider Target, for instance. It teamed up with Apple to establish exclusive shop-in-shop arrangements for Apple products. This way, Target enhanced the shopping experience by introducing its customers to a mini-Apple store environment with unique displays and Apple technical consultants.

• Expand the customer base and audience segments

Partnerships with influencers or content creators can become a successful element of a social media strategy for retail store. The retailer can tap into niche communities, further expanding their audiences and building new opportunities for segmentation.

For instance, Revolve is an online fashion retailer known for its outstanding influencer marketing strategy. The brand regularly collaborates with style and lifestyle bloggers to promote its products through social media campaigns and dedicated events.

Final Word

This article explored top strategies that enable retailers to stand out amidst stiff competition. From launching retail media campaigns to embracing an omnichannel approach, retailers can adapt to changing consumer expectations, market trends, and competitor offerings.

Unsurprisingly, one of the main areas of investment is data-driven decision-making. First-party data helps retailers offer personalized experiences for audiences, thus driving loyalty and sales growth. Next, predictive analytics lets a business know what consumers want and adjust strategies to fit their needs.

Competitive analysis can help unveil marketplace trends and consumer preferences, further tailoring retailer offerings and promotion tactics. It lets retailers paint a vivid picture of the competitive landscape to create relevant marketing campaigns. 

Collaboration with different partners has emerged as a strong tactic that opens up new retail opportunities. Retailers must also remain agile and embrace emerging technologies such as AI and ML.

They can outsmart the competition by monetizing their exclusive audiences and personal customer data. They can create hyper-targeted advertising campaigns that improve customer engagement, reactivate in-store and online sales, drive revenue growth, and revive brand relations.

Partnering with our retail media development company can help retailers navigate these strategies. We deliver extensive industry expertise in eCommerce, retail, and digital advertising to keep you one step ahead in today's retail marketplace. Our deep knowledge of the challenges faced by modern-day businesses will help suggest efficient custom solutions:

1. Privacy-focused first-party data collection and activation;
2. Advanced targeting algorithms;
3. Cutting-edge data analytics;
4. Integration of omnichannel campaigns into a centralized hub;
5. AI-powered recommendation engines and predictive analytics;
6. Scalable cloud-based infrastructure, etc.