Retail media will be ‘bigger than TV’ by 2025 says Tesco

Tesco has urged suppliers to invest in the massive upscaling of its retail media network, claiming that digital growth will make the medium bigger than television by the end of 2025.

The supermarket told an IGD supplier event in London last week it was planning a rapid expansion into new revenue streams, with the number of digital ad screens in Tesco stores more than trebling to 6,000 by the end of this year.

Using its Dunhummby data arm to provide insight into customer habits using the latest AI technology, Tesco is also planning a rollout of next-generation handheld scanners. These will target millions of shoppers with hyper-personalised ads as they travel round its stores.

Suppliers also heard Tesco’s launch of its hyper-personalised Clubcard Challenges, which was announced earlier this month across three million shoppers, was just the tip of the iceberg, with “more personalised and localised ranging” to be rolled out across the UK.

Tesco’s planned expansion will give the supermarket Europe’s largest retail digital ad screens estate. In November, it announced it had already more than quadrupled the size of its digital screen network to 1,800 screens, up from around 400 in March.

At the IGD event it cited data from the National Retail Federation, which put worldwide retail media ad spending on track to pass $100bn by 2025, making it larger than television.

“As well as having Europe’s largest network of screens, Tesco announced it is on a major drive to make the shopping and advertising experience more personalised,” said one supplier at the event at London’s Tobacco Dock. “They plan to achieve this by continuing to develop the Clubcard app where they feel there is still a lot of untapped potential by having more personalised and localised ranging in stores.”

“Retail media was a huge part of the day,” added another source. “This was a full-on sales pitch for Tesco media and it clearly hopes that with its Dunhummby media arm and Clubcard they can lead in this area.

“They spoke about launching a new generation of scan and shop, which will know where you are in store and be able to target offers to shoppers in the aisle.

“What they are planning is very sophisticated use of technology which potentially has much more demonstrable ROI than other types of advertising and promotion.”

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Ged Futter, founder of The Retail Mind, said Tesco had identified retail media as a key priority for incremental revenue growth.

“Will it be bigger than TV? I don’t know, but is it an area that has huge growth? Absolutely.

“What’s more, they will largely control what it’s spent on, where it goes and because they have the largest network they will have more reach than any of their rivals.”

David Sables, CEO of Sentinel Management Consultants, added: “I think this growth in retail media could be a game-changer. Tesco will be targeting brands who traditionally have been spending their money on TV, radio and promotions.

“This is new and will be entirely incremental and I think for Tesco this could be as big as 10% of their net profit, which is absolutely huge.”

However, one source said there had been disquiet expressed at the event from some suppliers who fear that the age of digital screens could leave them left in the wake of other companies.

“If you’re a very big brand there are great opportunities because you have the funds and if you’re a small brand it can work too – Tesco will back you because there’s a good story behind that.

“But if you’re a mid-range brand, with an everyday product, I don’t know how you tap into it. There are a huge number of those type of companies that simply won’t have the budget for this.”

Tesco told suppliers investment in its new network was a “no-brainer”.

It would offer suppliers different ways to integrate retail media spend with traditional promotions and other marketing, as well as offering standalone advertising campaigns.

Tesco chief commercial officer Ashwin Prasad told The Grocer: “We see opportunities to embrace the latest digital technology at every aspect of the shopping trip so we can better serve our customers – from making sure we have the best product range, to getting more accurate forecasting in our supply chain.

“The scale and reach of our stores and online business give our suppliers a unique opportunity in the retail media space and with 22 million households actively using a Tesco Clubcard, we can offer personalised insights to help our suppliers speak to customers directly.”