Why retail media is facing a backlash

According to supermarkets, it’s a “real opportunity” that allows brands to connect directly with consumers. For suppliers, it’s a “dressed-up listing fee” demanded by “gorillas with calculators”.

Retail media is emerging as a fierce battleground in the grocery industry, and it’s rapidly gaining momentum. On-site spend alone is due to be worth £8.6bn in the UK by 2030, according to Advertising Association/Warc data. That’s being fuelled by the retailers, which are launching ever more innovative forms of media – from digital screens to in-store robots. They’re selling the opportunities to suppliers as a win-win, especially when combined with their level of customer insight.

However, suppliers report widespread pressure to buy into retail media as part of their relationship with supermarkets, with little visibility on returns. “The uncomfortable truth is that many suppliers privately regard retail media as a dressed-up listing fee,” says ‘John’, a supplier whose name has been changed for the purposes of this article.

“Nobody wants to put their head above the parapet, but that’s how it can feel: pay into the machine, keep the retailer happy and hope the commercial relationship remains protected,” he adds.

He’s not the only one. Several suppliers approached by The Grocer voiced concerns about the imbalance of power – but many refused to speak out even anonymously due to fear of repercussions.

So, how widespread is the pressure to buy into retail media? What can brands do when faced with aggressive sales tactics? And is it possible to make the situation a win-win?

On the supermarket side, retail media is clearly seen as a growing commercial opportunity. In a signal of intent, Tesco launched its retail media arm – Tesco Media & Insight, in partnership with Dunnhumby – in 2021.

It’s proving to be a significant income stream. When announcing preliminary results for 2024/25 – and a 10.9% rise in adjusted operating profits – CEO Ken Murphy pointed to its “expanded retail media offering” as one of the highlights of the year.

Tesco isn’t alone in that focus. Sainsbury’s launched a unified retail media platform, Nectar Pollen, last year as part of “Nectar360’s ambition to be a world-class leader in the growing retail media industry”. Asda expanded its retail media offer by partnering with Amazon Ads last month. Morrisons made its “first foray” into digital retail media screens last year with the rollout of 300 installations.

Of the new media formats rolling into supermarkets, digital screens are proving one of the most common. From 2021 to 2024, the number of digital ad screens in Tesco stores trebled to reach 6,000. In May, Co-op announced it had become the fourth-largest digital outdoor advertiser in the UK, thanks to its network of 1,000 screens – which underpins its ambition to triple profits from media and insight by 2030.

Similarly, Iceland announced plans to ramp up digital signage capabilities as part of its retail media push last year, while testing out more innovative technology such as retail media robots. (Although it’s worth noting the tech partner behind much of its digital retail media efforts, Stratacache UK, collapsed in May.)

Clearly, retail media capabilities are growing, and so is the focus from retailers. Supermarkets are positioning these networks as a rich opportunity for suppliers due to the level of customer data available.

“Retail media gives brands and retailers a way to work together that helps customers discover products that are relevant to them,” says a Tesco Media & Insight spokesperson. “As the media landscape continues to change, Clubcard insights help us better understand what matters to our customers, so we can keep using retail media to improve the way they shop.”

In theory, suppliers should benefit. The supermarkets hold a wealth of customer data that can be used to target marketing activity effectively. What’s more, research by Tesco Media claims two-thirds of shoppers are open to discovery during the shop – a figure that jumps to 80% for those with children.

However, behind the scenes, suppliers report pressurised sales tactics involving little discussion of the benefits. Far from a considered marketing plan developed in partnership with suppliers, retail media is often positioned as a demand – leading to sales teams being nicknamed “gorillas with calculators”, says John.

“In the wider media market, there’s at least genuine commercial choice. You can negotiate, threaten to move spend, link forecast to performance or walk away,” he says. “With retailer media platforms, the spend is usually wrapped into an annual joint business plan and handled by sales and not marketing, which tells its own story – that it’s simply a convoluted form of listing fee.”

Pressure on suppliers

John questions the level of investment quoted by retailers. “On a proposal I saw recently, the cost of a five-week piece of activity was equivalent to 200 weeks of brand margin,” he reveals. In emails seen by The Grocer, one major retail media company quoted options ranging from £10k to £31.5k – and mentioned talking to the buyer about the “best fit”, which John saw as an indirect form of pressure.

Even those that have had a more positive experience with retail media – like Fearne & Rosie founder Rachel Kettlewell – are concerned about the level of investment. “Retailers do offer media support for smaller businesses, however this can still be a big stretch.”

Energy drink brand Tenzing also has concerns. “There can sometimes be a clear expectation that increased investment is needed to support the relationship and minimise the retail ‘risk’ in listing a new or challenger brand,” says head of sales Jack Flower.

However, the consensus is that big brands are being hit hardest. Another supplier, ‘Richard’, says suppliers with budget are “having their arm put up behind their backs to pressure them into investing”.

That’s backed up by John. “In my experience of large food brands, [retail media] evokes strong feelings – from frustration to resentment to outright anger. But those views rarely leave the room,” he says. “No supplier wants to be seen as challenging a retailer with the power to make life commercially uncomfortable.”

Those fears are demonstrated by the number of suppliers who were worried about speaking out on this subject. The large brands contacted by John and The Grocer didn’t want to risk commercial relationships by talking on the record, even anonymously.

So it’s unsurprising some of the most outspoken figures are consultants, who don’t live in fear of delistings. One is David Sables, CEO of Sentinel Management Consultants. He understands why suppliers are reluctant to publicly challenge problematic ways of working. “This goes back to the climate of fear that everyone talked about under the heinous Tesco problems of 2014,” he says. “People don’t want to tell the teacher in case they get beaten up on the bus going home.”

Ged Futter, founder of The Retail Mind, has similarly heard of “aggressive” sales tactics. The dynamic is particularly tricky when revenue from retail media goes to the buyer, he says. But even in these cases, Futter encourages suppliers to be confident enough to push back.

“You can say no,” he stresses. “If a supplier isn’t confident in themselves, they’re more likely to say yes. But you’ve got to be the one that’s in control.”

That’s a key point for a small supplier, says ‘Paul’, who spoke to The Grocer about his experiences. He’s primarily dealing with wholesale channels, where retail media can be a “necessary evil” to get noticed. But he’s careful about what he agrees on.

“You need to ask what you’re going to get out of it. If you don’t, they can take you for a ride,” he says. “They tend to be forthcoming if they know you’re on to them.”

Futter says the concerns boil down to return on investment. “It’s expected to be asked for retail media investment. But whether you get value for money is a different question,” he says. “I think that’s where you have to be very clear on: What am I getting? And what is my ROI? And that’s harder to define.”

Indeed, IAB Europe’s Attitudes to Retail Media Report found only 71% of networks offered return on ad spend (ROAS), revealing “room for consistency”. That’s despite ROAS being the most commonly demanded metric from customers.

Tenzing’s Flower says there’s often “limited data available to demonstrate the likely return on that investment, making it difficult to assess value objectively”.

In emails between John and retail media teams, there was little mention of metrics, except a few guidelines on the number of impressions. “There are serious questions around accountability and proportionality,” he says. “I’ve never had a proposal that directly relates the media spend to profitability for a brand – surely the ultimate metric.”

Dunnhumby – which works with Tesco and JLP – was the only retail media network that responded to The Grocer’s requests for comment. In a joint statement with Tesco Media, it said it focused on creating “advertising that adds to the shopping experience”.

Assessing returns

Media agencies that work with retailers were more forthcoming. Alex Walker, MD of Havas Market, admits there’s “fragmentation” in the space due to the sheer number of operators. That results in wide variation in the way returns are measured.

“It [retail media] should be one of the most measurable channels,” he says. “But it depends on the size of the brand, what investment they’re making, and what grocer they’re working with.”

To ensure a clear return, brands should ask for metrics up front, advises Nula Keeling, director of planning at MFM. “I’ve activated quite a few retail media campaigns, and I’ve always gone in with: ‘What’s the measurement, and how are we quantifying this?’” she says.

That’s not necessarily as simple as ROAS. Vince Amato, head of CPG grocery, retail media UK, at intelligence platform Criteo, argues it has become “too narrow a definition of success”.

“Retail media’s real strength extends beyond ROAS,” he says. “Its ability to leverage retailer first-party data enables brands to reach highly relevant audiences, optimise campaigns using closed-loop measurement and connect media investment much more closely to actual shopping behaviour.”

For him, deciding on the right metrics comes back to understanding exactly what you want to get out of a campaign. “The most effective campaigns begin by asking what the brand is trying to achieve, whether that’s launching a new product, increasing household penetration, driving category growth or recruiting new shoppers – and then selecting the right retail media tactics to support those goals,” he explains.

Walker also believes retail media can be a powerful tool if used strategically for a specific goal. “We work a lot with challenger brands, and it gives them an opportunity to compete with the category captains,” he says. He cites the example of a soft drinks brand that used retail media on Amazon to prove national demand. The insights helped cement listings in major mults.

Fearne & Rosie also reports benefits. “We’ve seen clear examples where investing in retail media – specifically data – has helped us identify our shopper profiles, unlock strategic opportunities and ultimately drive sales growth,” says Kettlewell.

Tenzing says its best campaigns have been integrated into the wider commercial plan. “The most effective retail media we’ve worked on is supported by strong insight into who’s being reached, clear revenue measurement and consistent distribution,” reports Flower.

That holistic approach is also endorsed by Keeling at MFM. She believes retail media should be considered as a “lever within a broader campaign” to enhance its impact. “That might be a specific call to action or final nudge, but it’s a way of delivering another contingent part of your wider strategy, rather than something that’s completely siloed,” she says.

It’s a vision best achieved through brand marketing teams – who could set clear strategic objectives, analyse the options and demand results. Such a scenario stands to genuinely deliver the promised win-win.

That appears to be a goal for retailers, too. ‘Trade & shopper marketing’ was the lowest-scoring business area in the latest Advantage Group annual survey, which asks retailers to score suppliers on key competencies. And retailers suggested they wanted to see a more strategic approach to retail media.

“The best partners treat retail media as an integrated part of their total media strategy – not a trade afterthought,” said one retailer. “They bring cross-functional teams to the table: brand; marketing; agency; and commercial.”

Yet as John’s experience illustrates, these campaigns are still largely negotiated with supplier sales teams.

“Retail media is potentially a brilliant marketing tool. And marketers need to make the decision,” Sables sums up. “But it’s put in the joint business plan almost as a way of looking for extra money.”

And so long as that continues, the “gorillas with calculators” stereotype will no doubt persist.