A retailer's oldest asset is a simple one: it knows what its customers actually buy. For a long time that knowledge sat mostly unused beyond stocking decisions. Retailers have now realised it is worth a great deal to the brands whose products sit on their shelves, and they have turned it into a business. A retail media network is a retailer selling advertising — sponsored placements in its app and website, promoted spots in search results on its own site, increasingly screens and displays in its physical stores — targeted using the retailer's first-hand data about what its shoppers purchase. The store has become, in addition to a seller of goods, a seller of advertising space and the audience data to aim it.
The reason this has grown so fast is that it solves a problem on both sides at once. For the retailer, it is an extraordinarily profitable new revenue stream layered on top of the existing business: the customers are already there, the data already exists, and advertising carries far higher margins than selling groceries or gadgets. For the brands buying the ads, it is appealing because the targeting is grounded in real purchase behaviour rather than inference, and the advertising sits right at the point of purchase — reaching a shopper in the moment they are deciding what to buy, on the very platform where they will buy it. Advertising placed next to the buy button, aimed using knowledge of what the shopper actually buys, is closer to the sale than almost any other kind.
The shift is significant enough to be reshaping where advertising money goes, pulling budgets toward these retailer-owned channels and away from more traditional destinations. It also changes the relationship between brands and the retailers that carry them: a brand increasingly finds that prominence on a retailer's platform — appearing at the top of the on-site search, featuring in the app — is something it pays for rather than earns purely through sales, which advantages the brands that can afford to buy visibility and pressures the ones that cannot. The store's shelf, physical and digital, becomes partly an auction.
For businesses on either side there are practical implications worth naming. A brand selling through large retailers has to reckon with retail media as a real and possibly unavoidable cost of visibility, budgeting for it rather than being surprised by it, and weighing the genuine value of purchase-based targeting against the risk of simply paying rent for placement it once got for free. A retailer of any size might ask whether its own customer data and channels represent an underused asset, while remembering that selling access to customer behaviour carries real obligations around privacy and trust. And a shopper is worth reminding that the prominent product in the app or the store is increasingly the one that paid to be there, not necessarily the best or cheapest — the shelf is now, in part, an advertisement.