What: The retail media industry faces a significant growth slowdown, prompting a shift towards AI-driven solutions despite technical and privacy challenges.

Why it is important: This transformation represents a critical moment for the retail industry as it balances the need for innovation with practical implementation challenges, potentially reshaping how retail media networks operate and compete.

The retail media landscape is experiencing a notable deceleration, with growth rates dropping from 25.1% in 2024 to a projected 15.6% in 2025. This slowdown comes as the industry grapples with fragmentation across more than 70 networks in North America alone, creating significant operational challenges for brands and retailers. Artificial intelligence has emerged as a promising solution to these growing pains, offering enhanced capabilities in campaign optimization, measurement, and customer targeting. However, the implementation of AI solutions faces substantial hurdles, including technical infrastructure limitations, data privacy concerns, and the need to transform traditional operational processes. Despite these challenges, the industry is showing resilience through innovation, with retailers moving away from conventional Excel-based planning towards sophisticated AI-powered systems that promise to revolutionize how retail media campaigns are managed and measured.

IADS Notes: Recent developments validate this transformation trajectory. In February 2025, retail media spending was projected to increase by USD 10 billion, despite measurement challenges across multiple networks. March 2025 data revealed that 71% of consumers now expect personalized interactions, driving retailers towards AI-driven solutions. The industry's response has been significant, with major players like Majid Al Futtaim launching AI-powered Precision Media across 450 stores in November 2024. The operational impact is evident, as demonstrated by Intime Department Store's 15% boost in counter sales through AI integration in July 2024. This evolution is further supported by April 2025's introduction of Real-Time Bidding as a potential solution to fragmentation challenges, suggesting a path forward for the industry.

How AI can solve retail media’s growing pains