Traditional Retail is at Risk. In-Store Advertising Could Be its Comeback Strategy

The retail industry is undergoing a massive shift, and the ripple effects are putting traditional brick-and-mortar retailers on high alert. In 2024 alone, U.S. store closures amounted to 7,325, the highest since 2020, and it's only getting worse. Coresight Research predicts store closures will reach approximately 15,000 by the end of this year. While e-commerce represents only 15 percent of total U.S. retail sales, the number is growing at a steady pace. Therefore, it's not surprising that small-to-midsized brick-and-mortar retailers stand to suffer the biggest blow as e-commerce captures more and more market share.

Buried under this reality is one bright star: retail media. Retail media’s largest opportunity is the ability to help retailers diversify their revenue streams. For traditional brick-and-mortar, this opportunity is largely untapped and underestimated. eMarketer estimates that U.S. retail media ad spend will increase by 88.5 percent and in-store retail media spend will top $1 billion by 2028. But with the in-store market ripe for innovation, this number is likely to be much higher. Think about it: today, 85 percent of retail transactions take place in-store. The ability to reach shoppers in aisles at the point of decision is an invaluable opportunity for brands to drive sales and for retailers to sell valuable ad inventory.

In an earnings call in early February, Amazon.com CEO Andy Jassy noted the vast majority of the company’s ad revenue comes from sponsored products — the company’s search advertising offering. Much like sponsored products on Amazon, if implemented correctly, retailers can monetize their spaces by providing highly targeted ads to shoppers as they search for the right product. Ultimately, if traditional brick-and-mortar retailers want to achieve scale and revenue at the caliber of the Amazons and Walmarts of the world, in-store retail media is their ticket. Here’s how they can get there:

1. Don’t underestimate the power of small-to-medium-sized businesses. Despite accounting for almost 44 percent of America’s GDP, small-to-medium-sized businesses are often overlooked by retailers, which instead look to target national and globally recognized brands. It’s a massively underserved market. Small businesses have the ability to make quicker decisions and are open to new solutions. Moreover, credibility goes a long way in building loyalty with small businesses, so while spending budgets aren’t as large, the opportunity adds up quickly. In fact, 60 percent of Amazon’s ad revenue comes from independent sellers, the majority of which are small-to-medium-sized businesses. It’s an untapped market that represents huge potential for traditional retailers.
2. Placement is everything — monetize your aisles. Retail media done right in stores is useful, engaging, and it drives action. Retail media done wrong often looks nice, but it doesn’t capture consumer attention at the most critical moment in the shopper journey — the point of decision. Now more than ever, shoppers in-store are pulling out their phones to do research and compare prices, frequently abandoning stores mid-research to make online purchases instead. The solution? Strategically-placed whole-store media. By focusing on key areas throughout the store, retailers can design an engaging journey that takes shoppers from discovery (i.e., engaging experiences in high-traffic areas such as entrances and checkout lines) to action-targeted content in aisles. The power of in-aisle media is that it delivers the same contextually relevant digital research experience that shoppers get on their phones and, ultimately, keeps the sale in-store. To simplify it even further: it brings the concepts of sponsored brands and paid search results into stores, effectively capturing consumer intent at the most critical point of the shopper journey. For traditional retailers, this represents a powerful opportunity to monetize their spaces while delivering measurable value to advertisers.
3. Go omnichannel. While retail media has emerged as a leader in the digital advertising landscape, limited online traffic has stunted growth for both traditional retailers and brands looking to maximize and reach their full potential. Loyalty cards, digital coupons and memberships are addressing this head-on by making it easier than ever for retailers to bridge the gap between in-store and online shopping, creating an entirely new frontier for what's possible with in-store advertising. By combining online and in-store media into unified campaigns that are jointly run and measured, retailers can unlock the 85 percent of consumers that still shop in-store with the speed, flexibility and precision of digital advertising.
4. Invest in artificial intelligence-powered technology. Innovation in AI has revolutionized the retail landscape, creating powerful opportunities for traditional retailers to enhance the customer experience. From advanced customer segmentation based on both anonymized (e.g., gender, age) and contextual (e.g., proximity to a brand) attributes, dynamic content optimization, and AI shopping agents, to dwell-time analysis and predictive modeling, retailers have access to a powerful toolkit that has the potential to put traditional retailers back in the driver's seat and accelerate growth. It’s simple: if you aren’t using AI in your approach, your retail media strategy is already out of date.

The retail landscape is evolving, and traditional brick-and-mortars need to keep up. By targeting the right businesses and investing in innovation that creates a robust in-store advertising strategy, traditional retailers can keep shoppers in-store, create diverse revenue streams, and achieve unparalleled scale. It’s in-store advertising’s time to shine.

Michael Liss is the founder and CEO of AdSprout, a company revolutionizing in-store retail media with a combined CMS and SSP platform that serves both merchants and media sellers at retailers with a platform that treats in-store media as an extension of online retail media.