How Retail Media Can Make Cash Registers Ring
German city centers are fighting for survival, and they need to reinvent themselves. How? With innovative technologies that improve efficiency, boost customer loyalty, and unlock new revenue streams for retailers. Retail media is the name of the game here. According to the Interactive Advertising Bureau (IAB) Europe, it will generate some €25 billion in revenue in 2026—more than twice as much as in 2022.
It’s the same story everywhere: Germany’s downtown shopping streets are struggling with high retail vacancy rates. Holstenstraße, one of the country’s oldest pedestrian shopping zones, is no exception. Here, in the heart of the Baltic Sea coast city of Kiel, capital of the state of Schleswig-Holstein, the store vacancy rate is 38.5%. In an effort to revive the city’s retail scene, its marketing department launched an innovative initiative known as Zukunftsraum (“future space”). In the brick-and-mortar shopping environment of a pop-up store, retailers can explore the opportunities that new technologies bring. “Collecting data and using it effectively is central to gaining a better understanding of customer requirements and to unlocking new revenue streams,” Käthe Fleischer says. As an interim manager for business development on the Kiel pilot project, she knows that data collected in stores is the key to more effective and personalized marketing.
Grasping the power of a new business model
Enter retail media, an opportunity for retailers to generate additional revenue and bolster their cash-strapped coffers by selling physical and digital advertising space. “Many retailers have not yet recognized the value that this new form of advertising can unlock,” says Marlene Lohmann, head of Marketing Research at Germany’s EHI Retail Institute. Referring to the results of a recent study, she reports that while some front-runners—including leading German retailers REWE, Lidl, OBI, dm, and Douglas—have adopted this new business model, the retail landscape as a whole has a lot of catching up to do. “Retail media is still very much in its infancy,” she says.
Yet its potential for the sector is immense. And ultimately, it’s a win-win for everyone: retailers profit from new sources of revenue and manufacturers can target potential buyers with greater precision. Quoting a consumer study by Kantar, Dirk Sperrfechter, an expert at the market research firm, says: “Consumers rate contextually relevant advertising at the point of sale as particularly authentic and helpful.” The number of touchpoints, he adds, also plays a key role in how retail media advertising is perceived.
Retail media unlocks a multitude of benefits
Retailers should be using these findings to their advantage. And, indeed, more and more are doing so, at least online. Sponsored ads are everywhere these days—in web shops, on social media, and in online newsletters—but they still leave much to be desired in terms of personalization. But the potential of in-store solutions such as screens and digital totems often remains untapped as well. This is probably partly because different sales channels are often poorly integrated, making it difficult to consolidate the first-party data they generate.
“What retailers need most of all if they want to unlock the added value of retail media are powerful technologies for collecting, cleansing, and enriching customer data,” Lohmann says. Ultimately, they need to be able to analyze their first-party data in detail and segment it. If they do not have reliable metrics at their fingertips, they will struggle to persuade interested manufacturers and brands of the potential of the advertising space they want to sell.
Smart technology and SAP Business Data Cloud as enablers
This is where SAP comes in. “Our cloud solutions for retail help retailers generate and provision relevant data about customer behavior, clearance sales, promotions, and prices,” explains Stefan Binkowski, vice president, Retail & Wholesale Advisory, SAP Deutschland. In the newly launched SAP Business Data Cloud (SAP BDC) solution, retailers can consolidate data from manifold sources with ease. First presented at SAP Business Unleashed, SAP BDC can integrate all SAP and non-SAP business data and, in so doing, helps provide a foundation from which to get up and running with retail media.
SAP offers what enterprises need to build and implement a robust retail media strategy: smart store technologies for tracking customer frequency rates, interactions, and so on with ease; intelligent analyses for gaining detailed insights into customer behavior, preferences, and needs; a data platform for collating all the relevant information; and, last but not least, an omnichannel customer engagement platform for planning and implementing targeted retail media campaigns. “Generating added value from data is central to SAP’s strategy,” Binkowski says. “Once retailers recognize the value of their data, they can take full advantage of the untapped potential that retail media offers.”
Retail media is one of the topics on the agenda for the German-speaking SAP User Group’s retail conference (DSAG-Handelstagen) on July 1 and 2 in Osnabrück, Germany. The event will look at the technological aspects of leveraging customer data and retail media in the industry, which smart technologies come into play, and how SAP BDC can contribute to the success of this marketing concept. Sign up today.
