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Retail Media Networks – Off the Beaten Track

Lila Margalit
May 23, 2023
Retail Media Networks – Off the Beaten Track

Everybody’s talking about Retail Media Networks (RMNs) – advertising opportunities offered by retailers either online or in their brick-and-mortar stores. But while much of the attention is focused on major behemoths like Amazon, Walmart, and Target, smaller chains and even local retail treasures have much to gain by leveraging their fleets to help advertisers find new audiences. And though big consumer packaged goods (CPG) companies make natural advertising partners, non-endemic products and services (i.e. offerings unrelated to the store’s own merchandise) can also benefit from the retail media opportunity. 

We dove into the data to explore how location intelligence can help both retailers and potential advertising partners make the most of the retail media opportunity – off the beaten track. 

The Hidden Potential of Local Gems

Grocery stores have been among the pioneers of the fast-growing retail media landscape, with major players like Albertsons leading the way. Midsize chains like Sprouts Farmer’s Market have also jumped on the retail media bandwagon. But smaller brands with loyal and fast-growing customer bases are equally well-positioned to succeed in retail media. 

Erewhon Market, the high-end California grocery chain that reportedly inspired the Anarvin market in Netflix’s hit show You, is a case in point. With nine locations throughout the Golden State, and some of the most expensive grocery items in the country, Erewhon has emerged as a place to “see and be seen.” And with its emphasis on organic, local, and ethically-sourced products, Erewhon attracts customers willing to spend money for high-quality health food. 

The brand has experienced positive visit growth every single week since the start of the year, far outperforming the overall California grocery category. While some of this growth can be attributed to Erewhon’s expansion in recent years, visits per venue also increased by 40.3% between Q1 2022 and Q1 2023. These metrics point to a significant opportunity for Erewhon to leverage its footprint to facilitate the discovery of complementary local and even national chains by customers – especially on weekend afternoons, when the chain is at its busiest. 

Zooming in on Location-Level Visitor Profiles

Zooming in on the visitation patterns of specific Erewhon venues shows how location intelligence can be harnessed to refine retail media efforts. Data on two popular locations – in Beverly Hills and Santa Monica – shows that the demographic profile of the chain’s captured markets varies not just by location, but by day and time as well. (A captured market analyzes the census blocks in a venue’s trade area according to the actual visit share from each census block, and so reveals the demographic profiles of the population that visits the venue in practice).

Unsurprisingly, the median household incomes (HHIs) of visitors to the chain are significantly higher than that of the statewide median of $86K (according to STI Popstats data from 2022). But at both analyzed locations, weekday afternoons drew some of the more affluent crowds. Mornings, on the other hand, stood out as prime visitation times for shoppers from households with children. So, if Erewhon were to utilize these locations for advertising, it could allow partners to concentrate promotions for particularly high-end items on weekday afternoons, and advertise parent-friendly offerings in the mornings. 

Unconventional Partners

Smaller retailers are not the only ones who can benefit from tapping into the retail media trend – unconventional advertisers also stand to gain from in-store promotion. CPG companies advertising products in-store are often first in mind when considering brick-and-mortar retail media. But as H-E-B’s newest partnership with online home services directory Thumbtack illustrates, there are a myriad of ways to leverage a store fleet to introduce customers to relevant products and services. 

We’ve written about the continued success of H-E-B, the community-rooted, cult grocery store that continues to lead the Texas grocery market. In March, H-E-B teamed up with Thumbtack to provide its customers with easy access to local pet care providers, through branded displays where shoppers can scan QR codes to access Thumbtack’s listings. Several locations also offer shoppers discounted access to handymen, cleaners and other local professionals. 

To explore how location intelligence can be leveraged to fine-tune efforts like these, we analyzed the psychographic characteristics of the trade areas of three highly-visited H-E-B locations in the San Antonio-New Braunfels, TX CBSA. And as shown by the graph below, the shoppers’ profiles differed significantly across locations. While the captured markets of all three locations were over-indexed for Herbal Supplementers compared to the statewide average, the South Zarzamora stores boasted a significantly higher share of this segment than the other two venues. Gadget Lovers, on the other hand, were more likely to shop at H-E-B’s Bandera location – while dog lovers were more likely to frequent the Military Dr. location. 

Key Takeaways

Data sufficiency remains an important challenge for advertisers seeking to make the most of retail media. But location intelligence can offer advertisers and retailers alike the granular insights they need to formulate data-driven promotional strategies. The ability to analyze customer profiles and physical visitation patterns across chains, markets, sub-markets, and even individual venues opens up new opportunities for retailers to fully harness the advertising potential of their physical footprints, and for advertisers to find new ways to reach their customers. 

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