What:

Retail media has evolved from an e-commerce add-on to a £4 billion strategic imperative, driven by retailers' ability to leverage first-party data and provide measurable advertising impact from impression to purchase.

Why it is important:

This transformation represents a fundamental shift in retail business models, where data monetization and advertising capabilities are becoming essential revenue streams, potentially doubling retail margins from 1.7% to 4.3%.

The retail media sector has emerged as a dynamic force in the advertising economy, projected to capture 10% of total UK advertising spend by 2025. This growth is primarily driven by retailers' sophisticated use of first-party data, particularly from loyalty programmes and transaction histories, enabling unprecedented precision in targeting and measurement. The technology evolution has made customer data more accessible and actionable for brand partners, allowing them to connect advertising directly to purchase decisions. For FMCG brands facing increased scrutiny of marketing budgets, retail media's ability to track campaigns from impression to purchase provides concrete ROI measurements previously unavailable. The sector's maturation is evident in retailers establishing dedicated business units and expanding beyond their owned digital properties to activate data across broader digital ecosystems. This comprehensive approach, combining physical and digital touchpoints with precise measurement capabilities, is creating stronger, data-driven relationships throughout the retail value chain.

IADS Notes:

The retail media landscape has undergone significant transformation throughout 2024-2025. In July 2024, Coresight research revealed retail media's potential to double retailers' margins from 1.7% to 4.3%, sparking increased industry interest. By October 2024, Retail Week reported major retailers like Boots and Co-op expanding their media networks, while John Lewis partnered with Dunnhumby to launch a real-time customer insight platform. The evolution accelerated in February 2025, when Forbes reported retail media spending was set to increase by $10 billion, though highlighting measurement challenges with brands managing an average of six retail networks. March 2025 saw Simon Property Group introduce sophisticated data capabilities leveraging two billion customer interactions, demonstrating how traditional retail operators were evolving into media network providers. By June 2025, BCG's analysis showed how leading retailers were achieving superior performance through data-driven platforms, while Retail Detail detailed Delhaize's success in standardizing measurement approaches, achieving 74% brand lift and 8.5% sales growth in case studies. This transformation culminated in July 2025 with John Lewis's expansion beyond owned websites to streaming services, exemplifying how retailers are moving from simple advertising platforms to sophisticated media networks integrating both physical and digital touchpoints.

From browsing to buying: the quiet power of retail media