Why retail media for C-stores?

The evidence is well documented by the likes of Amazon, Walmart, Best Buy, and dozens of other retailers: Retail Media is a high margin [70% average gross margin], alternative revenue stream for retailers that has changed the economics of in-store merchandising.

Historically, merchandizing economics can simplistically be summarized as a calculation of retail price , cost-of-goods-sold [COGS], Trade / Rebates, and Gross Margin. With the introduction of Retail Media, unit and overall retail economics are changing. Some funds driving Retail Media spend are being drawn from Trade while other funds are being diverted from digital, omnichannel, retail media, performance / shopper, and brand budgets. Retailers lacking a retail media offering will see trade investments fall without an opportunity to recover the funds via digital transformation objectives like retail media monetization and loyalty program modernization.

With a full suite of omnichannel consumer touch points (i.e. off-site display, on-premise audio / screens, and in-app / loyalty display / email / SMS) and national audience reach and coverage available, retail media networks (RMNs) attract larger brand campaign investments spanning both upper-funnel brand and lower-funnel performance objectives.


Why Now?

Retailers who wait to invest will fall further behind their competitors who have invested. It takes time (1-3 years) to scale a retail media network from initial launch to network maturity, when value is fully realized.

Also, leading RMNs use media revenue to self-fund further investments that benefit the organization as a whole, such as improving the Profit & Loss (P&L) Statement, investing in innovations, and lowering consumer prices.

In earnings calls from over the last three years, Walmart’s former and current CFOs have specifically called out the value that the revenue coming from the big box retailer’s retail media business, Walmart Connect, has provided, from keeping prices low for customers to increased operating income.

[Sources: Q4’21 and Q4’22]


The Retail Media Building Blocks: What is needed to succeed?

There are several components that a retailer needs to consider when launching a Retail Media Network. Should a retailer go it alone, all five of the key ingredients listed below are needed to succeed. But if a software or service partner is involved, retailers should have their partner focus on components 3 – 5 while the retailer focuses on 1 and 2.

  1. Audience
    • An attentive, addressable loyalty program base
    • Deep understanding of loyalty member behavior through transaction data and insights
  2. Digital Experiences
    • Positive experiences that drive digital access to consumers
    • Touchpoints throughout consumers’ path to purchase
  3. Retail Media Technology
    • Customer data platform (“CDP”)
    • Privacy-safe data collaboration platform (data clean room)
    • Self-Service media buying platform
    • National offer network
    • Ad orchestration and frequency capping
    • Attribution modeling
  4. Sales
    • Outcome-based advertising sales
    • Engagement with both endemic and non-endemic brands
  5. Services
    • Campaign execution
    • Measurement and performance
    • Budgeting & planning support
    • Campaign optimization

Challenges for C-store Retailers

As of early 2024, Retail Media has not proliferated in C-store retailing with only a few national retailers (Casey’s; 7-Eleven; Wawa) having launched individual RMNs. This comes down to several challenges that C-stores face:

  • Scale: Few C-store chains meet the two core Advertiser requirements: [1] minimum audience size of ten million engaged, addressable consumers and [2] national audience distribution
  • Speed to Market: Whether building or buying external products and piecing together, Retailers are likely a minimum of twelve months away from being able to launch a Retail Media Network that attracts brand attention.
  • Upfront Investment: Externally sourced components for building a Retail Media Program (CDP, Retail Media Platform, Services, etc.) require significant upfront investment – oftentimes multiple millions of dollars.
  • Core Competency: Operating an RMN requires a new set of competencies that aren’t core to C-store retailers’ competencies today.


The Solution

To combat these challenges, retailers need to consider an alternative approach to launching a retail media network on their own. Working through a third-party, aggregated network streamlines the process and offers solutions to the barriers C-stores are facing with retail media:

  • Scale through Aggregation: The number one factor for brands to consider RMN investment is audience scale. With few C-store retailers engaging ten million addressable consumers every month, shopper audiences must be pooled together to secure national brand investment that they can’t secure on their own.
  • Low Upfront Investment: To get started, devise a plan that requires limited CAPEX initially. Start small, build on existing infrastructure, and start generating revenue / margin that can then be used to fund investment into additional ad inventory to grow the program (the “Retail Media Flywheel”).
  • Core Competency: Be sure to include the right skill sets and knowledge base across your retail media team. The world of media requires a different mindset where customers are audiences and brands are clients with very different needs and use cases. Traditionally, C-store retailers know retail where consumers are customers and brands are suppliers. Retailers should remain focused on guest experiences and value exchange with their guests.

Even if launching an independent RMN is in a retailer’s long-term roadmap, starting with a solution that offers the above capabilities now will provide insight into how retail media best fits into their business model for the future.

Axonet’s aggregated retailed media network is helping C-stores leverage first-party data to create new revenue opportunities. For further discussion on Axonet’s solutions, reach out to info@axonet.io.