Loss Prevention Research Council Weekly Series - Episode 142 - Happiest Countries and LP Inspired Retail Ad Revenue
With Dr. Read Hayes, Tony D'Onofrio, and Tom Meehan
RILA AP Conference had an amazing turnout! Open House at our Labs was a great success! In this week’s episode, our co-hosts discuss the happiest and unhappiest countries by continent, Roe v. Wade leak and potential protests, a summary of organized retail crime data (ORC) for 2021, an Apple lawsuit over NFC use, and a look at the increased digitization of retail.
The World’s Happiest Countries
https://www.visualcapitalist.com/worlds-happiest-countries-2023/
Let me start this week with a lighter update on the world’s happiest countries. As published in Visual Capitalist The top 10 happiest countries for 2023 are Finland, Denmark, Iceland, Israel, Netherlands, Sweden, Norway, Switzerland, Luxembourg and New Zealand.
European countries make up the bulk of the top 10, with Israel (#4) and New Zealand (#10) also making it into the top ranks. Finland sits at the very top of the ranking for the sixth year in a row.
Canada ranks number 13 and the United States ranks number 15 this year. The United Kingdom ranks number 19.
Interesting that all of Scandinavia which includes Finland, Denmark, Iceland, Sweden, and Norway are in the top 10.
Afghanistan is the world’s least happy country, with citizens having reported extremely low levels of life satisfaction.
Why the Physical Store is the Next Digital Advertising Frontier
https://tonydonofrio.com/blog/retail/why-the-physical-store-is-the-next-profitable-digital-advertising-frontier.html
Switching topics here is a summary of my latest just published article on the growth of retail media networks.
In a previous CEO role, I was on a mission to transition physical security infrastructures into smart highly visual advertising delivery platforms. The rationale is similar to what happening with CCTV video technologies. In 2021, we crossed over 1 billion video cameras installed around the world.
Originally designed as a safety technology to monitor the launch of V-2 rockets in World War II and later taking more prominent roles as security devices, many of today's CCTV cameras are now data gathering eyes. Coupled with Artificial Intelligence and Edge Computing and renamed as Computer Vision, the CCTV camera is a key transformational technology improving many industries including retail.
Look up or the side of shelves in multiple retail formats, and in most modern retail stores you will see yourself on in-store Public View Monitors (PVMs) which were designed to increase visual deterrence against theft. Those same video monitors along with multiple other strategic locations inside the physical store are the perfect location to now add cloud-based digital advertising. Concurrently many of these screens can perform their security functions when needed, but more importantly they can also actually generate revenue for the retail chain through advertising.
PVMs are only the beginning of what is possible with digital advertising inside retail stores. There are multiple other strategic locations, including exits, point-of-sale, self-checkout, in-aisles, end-caps, on shelves, etc. where the digital advertising revolution is possible to substantially improve profitability.
Retail media advertising is not new. At its basic level, "Simply put, retail media is advertising products or brands at or near the point of purchase. Before ecommerce, retail media presented itself (and still does) as end-cap displays, sampling tables, in-aisle coupons, and more in physical stores." In 2012, Amazon changed the game by creating the first retail media network (RMN) applied directly to their e-commerce digital platform.
Retail Media Networks are already the fastest growing ad-supported media channel. In 2022, GroupM estimated that global retailers had $88 billion in ad revenue and in 2023 it will reach $101 billion. "This represents 18% of all global digital advertising and 11% of all advertising. GroupM projects retail media advertising to grow by about 60% by 2027, exceeding the expected growth for all digital advertising."
The gorilla in the room with retail media networks is Amazon which in 2022 generated nearly 38 billion dollars in advertising revenue. To put it in more context, that is now larger than YouTube Ads for the same year.
eMarketer estimates that Amazon had a 76.9% of the total retail media spend in 2022. Walmart came in second at just 6.1% share, followed by Instacart at 1.9%. In the United States, 6 in 10 households have Amazon Prime and worldwide the number of members now exceeds 200 million which are certainly a plus for the advertising business.
However, several recent headlines in Amazon halting and re-examining their Amazon Fresh and Amazon Go physical store strategy, point to several Walmart advantages in the retail media network wars.
In 2022, Walmart's ad business grew a massive 130% over 2020. "Each week about 220 million customers and members visit Walmart online and in approximately 10,500 of its stores and clubs under 48 banners in 48 countries. This network provides an enormous reach for potential advertisers, both online and in store. And let’s remember that behemoth Walmart serves 90 percent of U.S. households."
Short term, the most promising retail media network revenue frontier is food and drug. As Amazon has challenges in this space, mobilizing the physical store for immersive digital content can lead to substantial profitability growth especially when you consider that the average margins for RMNs range from 50-70% and even more with on-site advertising at 70-80%, according to Forrester.
Success of RMNs in physical stores will depend on developing advertising programs beyond existing trade funds. As Nikki Baird points out, "trade spending is the deals, placement fees, and other incentives that CPG companies put on the table in deals they make with retailers. In the grocery industry, as much as 40% of sales are made on promotions funded by CPG trade funds." In her recent Forbes article, Nikki also points to some upper limits that need to be considered.
The alarming changing nature of retail crime trends is leading to greater focus on security technologies. Multiple of these new and even recently deployed loss prevention solutions have dual function capability to both deter crime and also can be leveraged for incremental revenue and profitability. The two functions of crime deterrence and marketing messaging actually increase the value of both applications. Starting in food and drug, it is time to re-look at your security technology and make that promising next retail media network revenue opportunity a reality.
