Our guest this week is Lauren Wiener, Managing Director and Partner in the New York office of the Boston Consulting Group. With Laura lending her considerable experience and expertise, this episode provides a deep-dive into the world of retail media networks. We dig into definitions, the size of the opportunity and what is driving this booming area of retail. We learn who some of the leaders are and what strategies they employ. We also unpack some of the major opportunities, key risks and how to best balance sometimes conflicting agendas. It's a concise Masterclass on what you need to know about this rapidly growing and highly profitable retail segment.
Our guest this week is Lauren Wiener, Managing Director and Partner in the New York office of the Boston Consulting Group.
With Laura lending her considerable experience and expertise, this episode provides a deep-dive into the world of retail media networks. We dig into definitions, the size of the opportunity and what is driving this booming area of retail. We learn who some of the leaders are and what strategies they employ. We also unpack some of the major opportunities, key risks and how to best balance sometimes conflicting agendas. It's a concise Masterclass on what you need to know about this rapidly growing and highly profitable retail segment.
But first we unpack the hot retail news of the week, including Macy's questionable PR strategy, just announced plans to roll out Toys R US departments everywhere, and its small stores dreams. We have a more positive take on Nike's new Style concept which just debuted in Seoul, before wrapping up with a discussion of what a recession might mean for retailer's strategies.
Lauren Wiener is a Managing Director & Partner at Boston Consulting Group, based in the New York office. She leads BCG's Retail Media and Data Monetization business globally, working across retailers, CPGs and tech partners to unlock this emerging channel. She has authored research on the topic including "The $100B Media Opportunity for Retailers" and "Consumers Want Privacy. Marketers Can Deliver." Lauren has extensive experience across marketing, sales and pricing with a laser focus on these topics at the intersection of digital marketing, personalization, agile, ad tech and martech.
Prior to rejoining BCG, Lauren was the CEO of Tremor Video DSP, an ad tech company focused on using AI, big data and outcome based buying models to optimize video advertising effectiveness. Before Tremor, Lauren spent 15 years building advertising and subscription-based digital businesses from the ground up for Meredith Corporation, Primedia and MTV Networks. In addition to scaling and transforming businesses, Lauren has successfully sold three digital and media companies, including Tremor Video to Taptica International, American Baby to Meredith Corporation and Seventeen to Hearst Corporation.
Lauren holds an MBA from Harvard Business School and graduated magna cum laude from Yale University with a BA in History.
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption is now available at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks , The Food Professor with Dr. Sylvain Charlebois and now in its second season, Conversations with CommerceNext! You can learn more about Michael here or on LinkedIn.
Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue, his YouTube BBQ cooking channel!
Michael LeBlanc 00:05
Welcome to Remarkable Retail podcast, Season 5, Episode 3, presented by MarketDial, I'm Michael LeBlanc.
Steve Dennis 00:12
And I'm Steve Dennis.
Michael LeBlanc 00:13
Well, Steve looking forward to this episode, we have a very special guest Lauren Wiener, BCG, Boston Consulting Group, who you and I first saw on the stage at Shoptalk in Vegas, what was that back in April, talking about retail media networks.
Steve Dennis 00:26
(inaudible) a little inside baseball here for our listeners, Michael and I make all these lists about brands we want to have on or people we want to have on or topics we want to get into and getting into retail media networks, was has been on the on the list, and we were looking for the right person. And then lo and behold, we heard Lauren's presentation at Shoptalk, which I thought was really, really interesting, very coherent. And we thought, well, maybe we should have her on to talk about it. So, she was nice enough to say yes. And we're going to get into what those are all about? And what to look out for if you're thinking about getting into them in a more significant way, or at all, -
Michael LeBlanc 01:06
Steve Dennis 01:07
I guess at this point.
Michael LeBlanc 01:07
Looking forward to that a little later on. Now, let's jump in to news of the week. So, lots of news coming out about Macy's they are doing a bunch of things. I saw something with Toys R Us and I saw something about expanding their small store strategy, which you and I have talked about over the years, actually, a couple of times is but they seem to be putting the foot on the gas pedal what, what do you what do you take away from their, their news, or their PR that they've been put in the market this week?
Steve Dennis 01:31
Well, maybe just a general comment on their PR strategy. There's a bunch of things that keep announcing where the take seems to be like, we just discovered that stores help our eCommerce business or multi-channel is kind of an interesting thing. And I, I just don't understand why you make a big deal of things that anybody who knows anything has known for 10 or 15 years. It's just a weird, it's a weird strategy to support, -
Michael LeBlanc 01:59
What did you say in your?
Steve Dennis 02:00
What you are doing, -
Michael LeBlanc 02:02
What was your comment? It was like 1999 called they want their, -
Steve Dennis 02:04
Michael LeBlanc 02:05
Press release back or something, you know, -
Steve Dennis 02:06
I think it just makes them look dumb, honestly. So, I, I don't get that. But the two specific things that that came out this past week was they are going to be opening Toys R Us in-store shops at all of their US locations. Between basically the next couple of weeks and mid October, the store size is going to vary presumably based on the size of the store that's hosting them and the and the revenue potential. They plan to flex them a bit for the holidays, which, which makes sense.
Steve Dennis 02:37
And I don't know I mean, I think you and I were talking off, off mic. I think there's a difference, you know, if you're a struggling retailer, or really any kind of retailer, do you do something that's incremental, you know, which gets incremental traffic or drive some sales or maybe gives you a little bit of a brand Halo, you know, those are all perfectly fine things to do. And I think, -
Michael LeBlanc 02:58
John Bates, yeah, you know it's like a single, (crossover talk), -
Steve Dennis 02:59
As for this, this seems like a perfectly nice thing to do, you know, they really don't have a toy business. There is a sort of a vacancy in the market of, of toys essentially in the mall. So, I think it's a nice incremental opportunity. Is this going to meaningfully move the dial on fixing Macy's value proposition? I think absolutely not. So, nice to do, but I don't think very, very profound in the scheme of all of Macy's challenges.
Michael LeBlanc 03:28
It's al-, it's also, (inaudible) a little bit of a bet on the brand Toys R Us, right. I it, I mean i-, it you know, again, we were talking off mic, that Toys R Us never went away in Canada. It’s a nice thriving business owned by gentleman named Doug Putnam, they got 80 stores, they do quite well as they were even before times got choppy for the Toys R Us brand globally, but in the US like it doesn't make sense to revive a brand and make that the flagship like do you think? I mean, it's, it's seems like they're taking a bit of a bet. I guess your point is, who else would you take that bet with? Because there's a bit of a an absence. I mean, you could you could look for other toy retailers, but at least they've got some name but I don't know, it seems like a, (crossover talk), two edged, what do you think?
Steve Dennis 04:05
We talked about this off mic about how ye-, yesterday I went to go visit the Macy's store near me as well as the Dillard's and Nordstrom and, and they're, they're just putting Toys R Us shops in there. There is so much excess space in that store, it is mind boggling. It's basically free real estate but now, that's maybe not true in a small percentage of their stores. But in most of their Macy's stores they have very, you know, significant areas of very low productivity. So, I think it's, it's pretty easy for them to do this, they have been testing it a little bit. So, I, I assume they have some results.
Steve Dennis 04:41
But you know, when, when people are looking for toys, you know, Amazon has a huge toy business. Walmart and Target have huge toy businesses. They basically have, I mean, part of the reason why Toys R Us got into some trouble it has to do with the leveraged buyout but a lot of it has to do with, with what happened with the internet and what happened with, with Walmart and Target and making toys essentially a loss leader. And if, you know, not to be sexist about it, but if you know the sort of typical soccer mom is, is doing her shopping and needs to pick up a toy for Bobby's birthday, it's really easy to do. So, Walmart and Target have frequency, Macy's does not. Will this drive some incremental traffic? Probably, but like I say, I, I doubt it's going to be very significant to the total.
Michael LeBlanc 05:28
So, what do you think about their, their extending their, their small store strategy? They seem to have aligned on that as something that, boy this is working, let's let's expand it. I mean, I you know, looking outside looking in it looks like good news. It looks like a little late, like it's, it's a sudden realization, but we've been talking about it since like Episode 1 of the podcast, right?
Steve Dennis 05:48
Well, I, I think this is because both Macy's and Kohl's and some others are pursuing this strategy. I think it's perhaps worth getting into it in more detail. But I guess what I would say is, it is a very late response to something that has been going on for 20 years, Macy's has been hemorrhaging as has all the mall based department stores. Market share. I mean, people usually talk about it being the internet but, but the big driver for many years was losing market share to Kohl's, losing market share to, to TJ Maxx to Bed Bath & Beyond, you know, a lot of these kind of category killers or specialists that have more convenient locations, and in many cases have better, better prices. I would assume this has been a known problem at Macy's for a long time. It's appalling to me, that it has taken them so long to address it.
Steve Dennis 06:41
This I would put about, you know, kind of put it in the category of Toys R Us is, you know, interesting, nice incremental opportunity. What this really means for their overall portfolio approach, I think, you know, they're going to have to be much more aggressive at creating a hub and spoke system, which means making their bigger stores much more interesting, much more magnets and making the smaller stores much more convenient. So, at this point, you know, like here in Dallas, they've got three. If this strategy is going to work, they're going to need 20. I don't think we know how well this strategy is working until they deploy it on a market by market area. And they're taking so far really kind of a scattershot approach. But, but it's early, but I would I would look for this to not move the dial very much unless they start to take much more aggressive action but they presumably need to test it a bit more before they decide to do that.
Michael LeBlanc 07:35
Let's go all the way over to South Korea to Seoul. Interesting launch. I caught this and you caught this as well from Nike debuts a new store, concept studio. It's got things like gender agnostic items and a content studio, as I said, and then digital mannequins. Did you see the store looks pretty cool? What do you what do you think?
Steve Dennis 07:52
Well, I, I haven't been to Seoul, but, to see it, but I'd, I'd like too. Nike, if you'd like to fly me over there, I'm, I'm available. Yeah, this is part of the Consumer Direct Offense and Nike and I think, you know, from an innovation standpoint, Nike is a great company to really study. They are working on and have deployed a number of different formats.
Steve Dennis 08:16
So, the Consumer Direct Offense is partially pulling back, wholesale dist-, distribution from essentially mediocre retail partners, focusing on a few key ones like Dick's Sporting Goods and others, and then opening these various owned formats. So, House of Innovation, which is really the showcase store, they're about, I think to announce a fourth location for that. I think I know where it is, but I'm not sure I'm supposed to know where it is.
Steve Dennis 08:41
And then they have these Nike Live, Nike Rise. Nike Style stores, the new ones, which are smaller formats, with more targeted offerings, leveraging a lot of technology. And so, I'm still a little unclear about the differences between Style, Rise and Live, because they're sort of blurring for me, but I think these are just different appro-, iterations of, of concepts that they're, they're testing but clearly Nikes very bought in I guess you could say to, to this own store concept. They are also during Michael Jordan stores, (crossover talk), it's recovering as well.
Michael LeBlanc 09:18
Let's finish off with a little bit of I guess, economic news. We talked about it last episode and in some details, but maybe we should just pulse it here. I see Goldman, is talking about whether there will or will not be Favorite Drinking Game, now I guess, recession, betting on a recession. But what, what are you hearing on the street?
Steve Dennis 09:35
Well, think a lot of warning signs, I guess flashing, flashing red, the Goldman CEO did come out and say there's, there's a 50% chance of a recession, which I guess was a more dire outlook than they had been giving a couple months back. I saw a couple of reports in the news, which seem a little bit alarmist a little bit "Chicken Little" to me, but Retail Dive had a story that said 60% of small retailers could close by the fall, given all the economic pressures, I have a hard time believing in a number of that high.
Steve Dennis 10:07
There was another study from Alignable, I believe, that found that 35% of small businesses, so this isn't just retail, but 35% of small businesses couldn't pay their rent in full or on time, in June and that was up from 9%. In January. So, you know, again, it's sort of fraying around the edges. You know, that on top of what we talked about last week, the inflation, the consumer confidence, interest rates are about to go up significantly. It's just more, you know, more, more buckling up butter-cupping.
Michael LeBlanc 10:41
Yeah, yeah. And, you know, finding people, it's a funny thing, I was talking to a couple of restauranteurs, and, and they said, listen, it's not about the demand, we just can't find the people, we have the restaurants closed, like, it's a really weird time, right? Like, you would typically have economic conditions, trending downward, which typically resulted in more people being available for work. And those two things would balance but it's going to be if there's a recession, I think it's going to be a strange recession, because it's like a full employment recession. Like, I think companies are going to be reluctant to lay a lot of people off, because they're like, we might not get them back.
Steve Dennis 11:14
I mean, you know, it's been 40 years that we talked about last week, it's been 40 years in the US anyway, you know, some other countries have more challenges with, with hyperinflation, but it's been 40 years in the US. I think, you know, Canada is kind of a similar perspective, the UK, other, other major Western markets where we've seen anything like this kind of inflation.
Steve Dennis 11:32
So, really, for the most part, the leaders of today don't have any experience navigating a world of hyperinflation, you know, they weren't born yet, or they were, you know, 10 years old or something, right. So, so, I think we've got this, you know, lack of experience with dealing with inflation.
Steve Dennis 11:49
But to your point, we've also got this unusual thing going on, where the labor, mar-, markets are so tight, so that's, that's not a typical inflationary recessionary kind of environment. Plus, continuous supply chain, plus COVID, rearing its ugly head, plus, you know, other, you know, (crossover talk), -
Michael LeBlanc 12:08
Plus people are not going to the workplace anymore, like downtown's are, (crossover talk), there is also news about downtown traffic in New York City is, is it like 35 to 40% of what it was still, right I mean, that's a couple years later. So, this feels structural, right. And that's, that's a big, that's a big change to take into account is not a not a short term change to I mean, that could be what is contributing to a lot, you know, a lot of small businesses grow up around the ecosystem of downtown's across the world, (crossover talk), they're just not getting them, they're just not getting the people, some of these folks, right, in the in the commuters or whatever.
Steve Dennis 12:40
Not a new point. But I think this, this premium that is that is many retailers and others have put on to their operating model in the last few years of, of developing more agility is, is really important. I think the other part is, is really trying to stay humble, right? Like to realize that, you know, we haven't really seen this before, and maybe our intuition isn't going to serve us that well. Or our little bag of tricks, you know, the arrows in our quiver that have worked in the past, you know, maybe be a little less confident that that's going to work because this is we are in really, really different times. And you know what got us here may not get us there.
Michael LeBlanc 13:20
We'll be right back with our interview with Lauren Wiener from BCG right after this message.
Michael LeBlanc 13:26
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Steve Dennis 13:58
Well, Michael and I are delighted to welcome Lauren Wiener to the podcast. Hi, Lauren, thanks for joining us. How are you doing today?
Lauren Wiener 14:04
I'm doing great, thanks for having me.
Steve Dennis 14:07
And where are you joining us from?
Lauren Wiener 14:08
I'm joining you from New York City, at the BCG office at 10 Hudson Yards.
Steve Dennis 14:13
Very nice, very nice. Well, we typically like to start things off before we dive into kind of the theme of the day to have our guests tell, tell us a little bit about themselves and their personal and professional journey. And I'm sure most people are famil-, familiar with BCG, but maybe just a little bit about BCG and your role there.
Lauren Wiener 14:31
So, BCG is a global strategy consulting firm. In my particular role, I focus on customer centric marketing transformations that are driven by big data and AI. And my particular area of focus and passion is retail media and data monetization. I've been back at BCG about three and a half years and, and prior to that I spent two decades building, running and selling digital businesses.
Lauren Wiener 14:57
So, I've seen what I actually would call the four waves of the internet. I know the e-marketers been calling it three. But there was a wave of these portals that seems to get forgotten if anyone remembers AOL, Yahoo, MSN and, and Excite. So, it's been quite a journey. I think retail media is the latest and most exciting wave and the one that really builds on top of search and social versus (inaudible) as a replacement for it.
Steve Dennis 15:28
Well, you're certainly in a very interesting area. The origin of having you on was Michael and I both saw you back several months ago, I guess, now in Las Vegas on the stage at Shoptalk. And you gave what I thought was a really, really fascinating and very coherent overview, I guess, as as well as kind of a deep dive into media networks. So, why don't we dive in and maybe just to kind of get us all level set here, when we're talking about retail media, or retail media network? What is it that we're talking about here?
Lauren Wiener 16:01
Yes, great question, and, and I think it is important that we align on what we're talking about. So, when, when, when I say retail media network, I'm really talking about the business of primarily retailers selling advertising, to their vendors, and also to other advertisers, both on their own site, but also using their data that they have on customers to help advertisers find their coveted segments that they're looking to reach off-site. And so, that off-site part is a retailer using their data to target consumers on Google, on Pinterest, on Facebook, or just programmatically across the web. So, that's the digital piece of it.
Lauren Wiener 16:46
But given that many retailers are also brick and mortar, there's also an interesting and emerging omni-channel component to it, where some retailers are looking to leverage their stores for advertising vehicles, or if they have gas stations, even fuel pumps, as advertising vehicles.
Steve Dennis 17:05
So, I know as we were digging into this a little bit there, there's some I guess, additional lingo which you started to talk on, you know, this idea of online versus in-store on site off site, endemic, non endemic, ca-, can you just help us understand the terminology a little bit more?
Lauren Wiener 17:23
Yes, of course. So, on-site is basically or retailers owned digital assets. And so, their website, their app, their email off-site is this idea of a retailer using the first party data that they have collected on consumers in a variety of ways and is typically enhanced with third party data to do off-site. So, the off-site piece is leveraging their data in a DSP like a trade desk, to buy programmatically or leveraging their data in a privacy compliant way on Google, Facebook, Pinterest.
Lauren Wiener 18:03
In-store is typically brick and mortar assets. And so, that is like the physical store location of a Walmart or a Target. Or again, it could be if it's Kroger, and they have gas stations as part of their offering, it could be the fuel screens. And so, it's the brick and mortar assets when I'm saying you know, the in-store part of it.
Lauren Wiener 18:27
Endemic versus non-endemic, so endemic is vendors that are part of an eCommerce offering, whether in-store or on one of the digital assets, and non-endemic is an advertiser that is potentially adjacent to a, a retailer. So, for example, for Target they a non-endemic could be something like insurance.
Lauren Wiener 18:55
So, Target has a big baby registry business. Typically, when you're having a baby, that's a good time to get some insurance, whether it's home insurance, or life insurance. And so, a non-endemic category that's adjacent and would potentially really benefit from reaching new parents is, is life insurance.
Michael LeBlanc 19:14
You know, Lauren, I wanted to ask you what's driving all the recent interest? But I almost feel like I should be asking you why is it taking this long? And, you know, in, in some ways, is this retailers just reluctant to get in the path of consumers like online? I remember when I was running a site, we didn't want to take ads, because we were afraid it would distract from conversion or in-store, you know, you know, you are setting up fairly expensive media networks, but there seems to be everyone seems to be getting past this, but at the same time, this is an opportunity that's been right for the taking for, for years. Talk about that a little bit.
Lauren Wiener 19:46
Sure. So, well, first of all, I would say that there have been major retailers that have been doing this for quite a while. So, Amazon who really got everyone's attention with their $31 billion global revenue number, this past earnings cycle, has been in it in some kind of more low key fashion since 2009. And the players that have also announced big numbers Walmart target have been in this since 2015-2016. It's just that the press hasn't really caught the attention.
Lauren Wiener 20:20
And so, I wouldn't necessarily say this is new, I would say what is new is that companies like Amazon, like Walmart, have decided that these are such substantial businesses that they're now breaking out the numbers, which is getting the attention of everybody.
Michael LeBlanc 20:35
And, and is there some action on the buy side? In other words are, you know, I've, I've dealt with a lot of media buyers, you got decades of experience. Is the, is the media buyer saying, listen, I can't get the juice, I used to out of, say, other platforms. So, they're turning their minds to these more, you know, more retail network platforms, as you said, for other things like insurance and ancillary, or non-endemic goods. is that is that a happening as well?
Lauren Wiener 20:58
Exactly, I think that is the other part of the why now, other than the fact that the numbers are big and really attractive from an from an advertiser point of view. And, you know, both from the agency side, the CPG side, with the mu-, much discussed death of cookies, it's much harder to find the consumers that they want to find, number one.
Lauren Wiener 21:20
And number two, it's a lot harder to figure out the ROI on some of the other forms of marketing. And so, retail media, with the first party data on customers that so many of these retailers have, from their loyalty programs, or from their subscription businesses.
Lauren Wiener 21:37
Plus, the ability to actually tie that targeted advertising in what we call close the group reporting down to a transaction level, is something really, really interesting to CPGs, in particular, but also other advertisers. So, I think that's number one.
Lauren Wiener 21:54
Number two, and adjacent to that a lot of money historically has been spent on trade dollars. But the trade dollars typically are faulty in a couple of different ways, in the sense that the spenders typically don't have control, they don't have transparency, and they don't have great measurement.
Lauren Wiener 22:14
And so, with the financial pressure from COVID, and I think the financial pressure from what we're going to be seeing over the next couple of years, it will continue to mount to make sure that trade dollars as well as the traditional brand and performance marketing dollars have the same level of accountability. And so, what I think we're going to see is a shift to some extent of money from trade dollars to retail media, as well as a shift to retail media from other parts of the marketing ecosystem that are less measurable, whether that's digital parts or television aspects.
Michael LeBlanc 22:55
So, it's so interesting, you know, here in Canada, the flyer businesses remains huge, but you know, COVID put a dent in that for sure. And, and that's always been a mix of, of promotional dollars, but also it's been Co-op dollars, right. How retailers spend their Co-op dollars and in the physical flyers. And I think they've struggled and as have the vendors to kind of say, well, I'll take those dollars and put them into digital media. But this sounds like you're, you're, you're, you're, you're fixing that, that, that, that constant battle between the two. Now, how big are we talking about what's can you help us dimensionalize this opportunity? We're talking about some pretty exciting stuff. How many dollars are we talking about here?
Lauren Wiener 23:30
Yeah. So, it's definitely a big market, BCG forecasted that it's going to be a 100 billion market by 2026, growing at a rate of about 25% a year. And as we were just talking about that, it's, it's as you know, some of it is just the net growth of digital but some of it is this share shift both from other pockets of media and from, from trade.
Lauren Wiener 23:54
So, there is a real offensive reason to get in this fast growing market. But there's also a defensive reason to be part of it. If you're a retailer, which kind of ties back to your other question on you know why now.
Michael LeBlanc 24:06
During the interview, you mentioned a few big players Amazon, Walmart, Target, or would we consider them the leaders now in the space and, and what's the key to their success other than, you know, physical size, obviously, and traffic but call out a few of those things for us.
Lauren Wiener 24:20
Those three are definitely the largest to date. There's another crop, like right behind them. Kroger was another one who was early in and has big advantages in terms of its data fidelity. Some of their advantages have to do certainly with scale, because scale is a big differentiator as it is in any part of advertising.
Lauren Wiener 24:43
But other differentiators are that they really haven't invested in their foundational capabilities of building out data, tech. And then people hiring people that know how to run a media business versus the typical skill sets that you would see in a, in a retailer. If you look at a Walmart, for example, on the data side, the launch of the Walmart Plus subscription business is going to really enhance their ability to have that first party data. Target has long been a leader in loyalty with their program. Kroger with the purchase of 84.51 has outstanding data science capabilities. And they've also launched Boost, which will help with first party data.
Lauren Wiener 25:31
So, they're really focusing on those foundational abilities that are able to allow them to do great targeting and closed-loop reporting. And I think that all three of those players are also thinking about, well, what are the differentiators that they can uniquely have with their different types of
Michael LeBlanc 25:52
Offerings? Well, that that last point is pretty interesting. And this leads to a quick question around you've talked about, you know, monetizing the traffic. And that seems pretty clear Is there a greater strategic objective that that you're, you're detecting from some of the players here that allows them to get closer to the customer make more relevant offers, I mean, position themselves in categories is some of that going on as well?
Lauren Wiener 26:14
Definitely, that's going on as well. If you look at Walmart, they've been very public about 20 tied together in a one Walmart type of approach, where they're looking at their key endemic vendors from an overall business health perspective. Target's been doing some interesting concepts of partnerships and stores within stores, from insights perspective, and as I mentioned, Kroger really has phenomenal data from their 8451 business. And so they're all sort of leveraging on what's very unique about them. And that can help like be different in terms of the offerings.
Lauren Wiener 26:53
Now, I, I would say that, out of those three, they all still are behind where Amazon is, given how aggressive Amazon has been in terms of building out its platform in its self serve, and its automation capabilities. So, what I would expect to see from the big three, is more investments in self serve, in automation, and in generating the kinds of unbelievable insights that Amazon is able to give to its vendors.
Steve Dennis 27:25
Lauren, do you think there's a I'm not sure exactly how to ask this question. But I guess I'm wondering, is there a danger of kind of the "tail wagging the dog", here that if, if retailers are really struggling? And I'm not saying Walmart and Target necessarily are but, but it seems like some retailers are pursuing media networks as perhaps more of, you know, a way to fund the turnaround of their business or kind of easy money? And do you worry that there's a, a danger of chasing the media kind of gets in the way of the core business of what retail is about?
Lauren Wiener 27:59
That's a great question. And it's probably the number one question I get when I talk to CEOs, and Chief Customer Officers about retail media. And that, that is really around what is the balance of, of advertising on the site before it disrupts the customer experience. And so, what I would say is, in order to make sure that the commerce business is really healthy, I think it's important to think about advertising as a service to the goods that customers want.
Lauren Wiener 28:33
And so, the balance needs to be in order to prevent what you're suggesting from happening, there needs to be a balance in terms of where the ads are placed, how many ads there are, and how relevant and targeted the advertising is. So much of the advertising on site is in search. And so, that algorithm of what ad gets served, and making sure that relevance is more important than the price that a vendor is going to be willing to pay, I think is another key component for making sure that the onsite experience stays incredibly good and incredibly relevant and, and does make that advertising as enhancement to getting consumers to coveted purchases versus a disruption.
Steve Dennis 29:17
A follow on question which is maybe a whole, whole separate episode but there's, there's this it really relates to trying to like out Amazon, Amazon, potentially. And I think this is certainly something that goes beyond media networks but more and more I'm, I'm starting to feel like retail for Amazon is really a loss leader to sell advertising like it's become some, some of that is just the way the numbers look but some of that also seems to be the way they're, they're managing the business.
Steve Dennis 29:47
So, I guess number one, I don't know if you have a comment on, on that about how the, the balance of advertising to, to retail at Amazon it is thought about and is and is, you know, activated I guess but I, I get worried that sometimes retailers keep comparing themselves to Amazon. And they try to chase them in a way that they're never ever going to win. And, you know, as we often say, here is the problem with the race to the bottom is you might win or worse finish second. And so, any just kind of (inaudible), or any commentary around how to think about Amazon, which is the big dawg right now, relative to other retailers strategies,
Lauren Wiener 30:22
Amazon has been very public about using their profits from advertising to fund lower prices. And I, I think they've found the balance in a different way than will work for most omni-channel retailers. My personal opinion on Amazon is that they've done a good job with relevance in their algorithm. And making sure that the ads that are served, particularly from a search point of view are related to what a consumer is looking for. However, the ad density is a bit higher than I think, would be an optimal mix for other retailers that are looking to go into the business. So, many of the conversations that I have with retailers is I don't want to be Amazon, I don't want to have that kind of slot density on my site.
Steve Dennis 31:14
Right. So, as we think about, you know, we talked a little bit about kind of the, the basic playbook and some of the things that are important. Are there other risks or other kinds of things to watch out for, for retailers that are either getting into, you know, just starting with retail media, or, or perhaps making it a more important part of their strategy going forward?
Lauren Wiener 31:34
I mean, obviously, the biggest risk is the one that you named, which is making sure that it enhances eCommerce and brick and mortar sales versus distra-, detracts from it. So, that's clearly like the biggest consumer risk, I, I would say that there is a risk of not doing it, which is out of the 100 billion that we expect to see in 2026, we do think that a good third of that is going to be a share shift from trade. And so, the risk of not doing it, I think is, is stronger than the risk of going into it.
Lauren Wiener 32:10
Now, in terms of some of the watch outs for making it work for a retailer, I would say number one, the biggest danger really is under investing in new people and thinking that this can be done on the side of someone's desk. This is a new business being started, stood up with technology. And it requires people that understand how to serve customers. So, that if you're standing it up in a way where you're not going to be able to deliver on what's promised to the vendors, you're actually going to hurt your vendor relationships, I'd say that's risk number one. And, and that's the first set of people that I would recommend bringing in-house that know how to serve media campaigns.
Lauren Wiener 32:51
Risk number two is you're selling advertising, and you need to collect cash. And so, we've seen a lot of retailers go into this, but not really set up appropriate billing and cash collection processes, which are quite different from retail. So, you can really kind of lose money from a cash perspective, if you're doing it that way.
Lauren Wiener 33:10
And then the third sort of watch out is there's a lot of shiny objects in terms of technology in point solutions. And it's really important to make sure that you're pulling together a coherent set of ad-tech and mar-tech, that all works together or your entire advertising business will fall apart.
Steve Dennis 33:27
That doesn't sound too good. But yeah, I was in prepping for this, you know, we don't really have the time to get into it. But in prepping for it. I was I was looking at some of the different technologies that were out there. And it's, it can be pretty overwhelming, I think to try to make sense of all that, in addition to all the other things we touched on today.
Steve Dennis 33:47
I'm just wondering, kind of last question before we start to wrap up. We've talked about lots of very big retailers. What's your perspective on, you know, small mid-cap type of retailers? And are there any brands in that, you know, that are not the huge mega retailers that you think are worth taking a look at that you could learn things from?
Lauren Wiener 34:08
So, in terms of the category leaders, Home Depot is really out in front and doing a lot of very interesting things in home improvement. Best Buy has really emerged as a category leader in electronics and Macy's is out in front in department stores. And so, those are just three companies that have a smaller span of what they, they sell on their store. But have done some very interesting things.
Lauren Wiener 34:32
But then there's some niche players, I think that have announced and I'll be interested to see what they do. Michaels was a recent announcement, among others. So, there's definitely a place for niche as well. We haven't seen a lot of revenue from that category yet, but we do expect that to be an emerging area of growth.
Michael LeBlanc 34:54
Well, Lauren, I think we've, we've barely scratched the surface on such an interesting topic. So, last question. is where can we go to learn more and will learn more about you, your work, BCG and media networks? Can you point us to in a few directions and we'll put also some links in the show notes?
Lauren Wiener 35:09
Sure, yes. So, I'm on LinkedIn and all the BCG perspectives that my colleagues and I have written on retail media, and data privacy, are featured on my LinkedIn profile. You can also go to the BCG website. And if you want to reach me directly off of LinkedIn, you can go to my BCG email, which is just last name dot first email@example.com.
Michael LeBlanc 35:38
Oh, fantastic. And we'll put some of those links in the show notes as well to make it super easy. Listen, thanks so much for joining us today Lauren. Steve and I've just had a great discussion, and a nice full circle coming back all the way back from Shoptalk. So, we really appreciate you joining us on Remarkable Retail podcast and wish you a great rest of your summer. Continued success as you as you talk about these fascinating retail media networks.
Lauren Wiener 36:03
Thanks so much for the great conversation.
Michael LeBlanc 36:05
If you like what you heard, please follow us on Apple, Spotify, your favorite podcast platform so you can catch up with all our great interviews, like our discussion with Seth Godin on what retailers can actually do to fight climate change.
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Steve Dennis 36:25
And I'm Steve Dennis, author of the best selling book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. You can learn more about me, my consulting and keynote speaking at stevenpdennis.com.
Michael LeBlanc 36:38
And I'm Michael LeBlanc, consumer retail growth consultant, keynote speaker and producer and host of a series of retail trade podcasts including this one. Plus, the host of the popular YouTube cooking show Last Request Barbecue. You can learn even more about me on LinkedIn are on meleblanc.co.
Safe travels everyone.
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