Traditional retail chains like Walmart, Home Depot, Lowe’s, and others are historically the largest recipients of trade funds. But with the onset of the digital age, these funds intended to incentivize distributors, wholesalers, and retailers to promote their products have shifted dramatically in favor of Amazon and similar platforms. As a result, these massive e-commerce brands, with their virtual marketplaces and massive reach, have come to consume a disproportionate share of these resources.
However, things are changing as the landscape evolves and we move towards an increasingly omnichannel world where digital engagement fuels in-store traffic. Retail chains can leverage a key advantage they hold over online-only retailers: their networks of physical stores. By transforming these networks into Retail Media Networks (RMNs), retail chains are poised to unlock a new era of trade fund allocation.
An RMN consolidates a retail chain’s digital and physical assets into a unified platform. By integrating e-commerce with their brick-and-mortar locations, retailers can provide a seamless shopping experience that complements online exploration with the satisfying in-store experiences. This interplay significantly improves brand visibility, leading to better consumer engagement and higher sales.
We’re also seeing more and more brands gradually moving away from a broad, scattershot approach with their promotional marketing spend. Many are instead focusing on reaching and delighting their customers in their own backyards through meticulously targeted hyperlocal digital marketing campaigns.
It’s all part of brands making a concerted effort to get the most bang for the buck on their marketing investment. Rather than racing to spend as much money as possible on promotions, brands today are more concerned with spending money in the right places. In our modern digital age, some brands, like Kroger, have even completely moved away from expensive circulars and other printed promotional materials in favor of personalized online ads aimed at highly specific geographic regions in which they operate.
The arrival of RMNs represents another attractive opportunity for brands. They not only enable a higher degree of personalization, but also contribute to a two- to fivefold increase in customer engagement. At the same time, they reduce media costs by up to 60%, creating a more cost-effective solution that promotes both brand and product visibility. This creates a win-win situation for both retailers and brands and encourages a rerouting of digital trade funds back to the retail chains.
The idea of establishing an RMN may seem daunting, bringing to mind images of interminable projects involving complex integrations of systems and databases. However, advancements in modern technology like artificial intelligence and automation have simplified the process to the point where an RMN can be up and running in as little as a single day. These developments are transforming traditional retailers into formidable contenders in the digital world.
We are in the midst of a seismic shift in the game of digital trade funds. Traditional retail chains, armed with their physical networks of stores and bolstered by cutting-edge technologies, are poised to reclaim a larger portion of these funds from the online giants. As they evolve their strategies to incorporate RMNs, retailers are positioning themselves for success in an increasingly omnichannel world. The end result of which is enhancing brand visibility and profitability and enriching the customer experience.
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