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By Charles Lee Mathews. How data, technology and innovation create a customer-centric flywheel that powers retail media networks.

In just five years, Shoprite has gone from brick-and-mortar grocery store to a veritable digital media agency. That’s the power of retail media, the fastest-growing segment in global digital advertising. GroupM’s 2024 Global Midyear Advertising Forecast predicts that this sector will grow by 17.5% by the end of this year, surpassing digital advertising, television, and search. These channels are expected to increase by 10%, 2.7%, and 5.3% respectively.

WPP’s GroupM attributes this significant increase, albeit from a small base, to retailers capitalising on their datasets and brands engaging closer to the point of sale. Closed-loop attribution provides clear links between ads and sales, optimising campaigns for maximum impact. Virtuous learning is the beauty of a closed-loop.

Source: GroupM

In South Africa, Nilesh Hansjee, business analyst at Marketing Intelligence Hub at Nahana Communications/Park Advertising tells MarkLives Media: “The latest BRC Establishment Survey estimates around 5.7 million people have bought goods and services online over a trailing four week period. In Rand terms, e-commerce is somewhere between 5 and 10% of total retail sales in SA.” The BRC, of course, is The Broadcast Research Council of South Africa.

In just five years, Shoprite has gone from brick-and-mortar grocery store to a veritable digital media agency. That’s the power of retail media, the fastest-growing segment in global digital advertising. GroupM’s 2024 Global Midyear Advertising Forecast predicts that this sector will grow by 17.5% by the end of this year, surpassing digital advertising, television, and search. These channels are expected to increase by 10%, 2.7%, and 5.3% respectively.

No story on retail media networks in South Africa is complete without exploring the sector’s digital transformation. And Shoprite Holdings currently has the sector’s best case study.

Shoprite’s innovative prodigy

Neil Schreuder has led the group’s digital transformation, while simultaneously building a stellar career for himself. Starting as a brand manager for Shoprite in 2004, he became general manager of marketing for the group a year later. In 2018 he headed up innovation, and in 2019 was instrumental in the launch of Sixty60 and a reward program called Xtra Savings.

Like Shoprite, retailers that effectively combine integrated data and technology through digital transformation can create these self-sustaining growth engines that power profits. Schreuder helped Shoprite build such an engine.

Source: LandingCube. What started as a napkin sketch has now become a global business model. The flywheel focuses on customer satisfaction to drive traffic to sellers that enhance greater selection and satisfaction. This further amplifies customer joy. This creates business and data growth, which results in lower costs and prices that add greater value. This makes the flywheel virtuous and self-rewarding. 

While this concept of a data-driven growth flywheel is not new—it was conceptualised by Amazon’s Jeff Bezos and Jim Collins in 2020—Shoprite’s execution is noteworthy. The retailer’s partnership with Loop in 2020 optimised logistics, while Sixty60 has become a highly successful app with 4.5 million downloads, generating R10 billion in annual revenue, according to Daily Investor. 

“They recently released a stat that Xtra Savings cards are swiped 2,500 times every minute—that’s a huge amount of data being gathered on their customers, and Rainmaker Media, their own Retail Media Network, is doing incredible things with it,” says Hansjee.

Xtra customer data

Xtra Savings is this country’s biggest rewards programme with over 29.4 million members. “Shoppers buy benefits, not just products. By understanding the desired outcomes of consumers and by communicating these benefits effectively, brands can leverage retail media networks to connect with shoppers on a deeper level,” says Garreth van Vuuren, CEO of Rapt Creative.

The loyalty program captures data that helps power the retailer’s media network. The 2023/4 South African Loyalty Landscape shows how successful the retailer’s data-producing fidelity machine is. “Checkers Xtra Savings is the most-used loyalty programme across wealthier consumers, marginally ahead of Clicks ClubCard. For mass market consumers, Shoprite Xtra Savings is the most-used programme, followed by Capitec Live Better,” the research shows.

Shoprite invested in data collaboration platform Omnisient in 2022 and launched Rainmaker Media, the “precision retail media agency that creates campaigns using data, not guesswork”. For suppliers, ShopriteX has introduced Rex, a data monetisation platform that consolidates all of the group’s consumers into a single customer view. This data analytics tool enables brands who sell with the group’s stores to optimise sales and marketing strategies in outlets. 

A flawed retail strategy

Pick n Pay, which is going through a season of despair, opted for a different strategy. When Peter Boone was CEO the retailer partnered with Takealot for online grocery delivery and relied on PrimeMedia for in-store advertising, which offers a brochure on the media interests it sells for the retailer. Media buys range from Smart Shopper campaigns to in-store radio, digital media, fridge and freezer media, on-shelf media and in-store interactions.

Boone’s strategy tanked, and Sean Summers was brought back to stem financial losses.  In May Pick n Pay released its financial results. It reported a 373% decrease in net profit. “It swung from a R1.17 billion profit to a R3.2 billion net loss,” BusinessTech reports. And in another cruel blow, Discovery Vitality announced at the beginning of August 2024 that it was ditching Pick n Pay for Checkers.

As for Primedia, private investors are currently deciding whether or not to sell the media group’s interests

Woolworths recently issued a profit plunge warning as it prepares to release its financial results.
MarkLives did approach other retailers for information about the size of their shopping universe, but they were reluctant to share this information. However, research by World Wide Worx reveals that local online retail surged to R71 billion in 2023. The researchers expect a rise to R100 billion by 2026.

The media agency making rain

Shoprite’s Rainmaker Media says that its network reaches 82 million shoppers monthly and gets “15 million unique visitors on digital channels.” R1,1 billion in grocery transactions are done on the network annually. At the end of Shoprite Holdings’s 2023 financial year, Rainmaker Media had completed 4,654 media campaigns for advertisers.

This retail network is powered by the companies Shoprite owns. This includes Shoprite, Checkers, USave, CheckersFoods, Checkers Hyper, Shoprite Liquor Shop, Checkers Liquor Shop, OK Furniture, Transpharm, Medirite Pharmacy, and Shoprite Cash and Carry. Then there’s Shoprite Money Market and a mobile brand called K’nect.

“Our ability to analyse customer data enables precision targeting that minimises marketing wastage. Our suppliers benefit because their advertising spend is used to target the right customer, in the right place, at exactly the right time. The Group benefits from using its Rainmaker Media retail media network to advertise its own products and private label brands,” says Tanja de Korte, managing director for Rainmaker Media. 

Van Vuuren says the huge, untapped opportunity is SA’s massive informal market. “It’s valued at R164 billion per year, according to Trade Intelligence. At 30% to 40% of total food spent in the country each year, this sector is visited by 77% of the population.”

SA’s booming informal sector

This July 2024 Shoprite announced its Sixty60 play for the informal and spaza market. Here Omnisient will play a big role in banking the unbanked, thanks to the invention of a  “groundbreaking initiative” that analyses people’s shopping history to assess credit risk.

“Retail data equips brands to make better decisions and run more effective advertising campaigns. It is the fastest-growing advertising market because it has raised the bar for performance and measurement,” de Korte tells Marklives.

“Relevant audiences are identified based on buying behaviour. For example, a customer who has never purchased alcohol won’t receive any advertising related to alcohol. Alcohol brands will therefore not spend money on speaking to the wrong audience, while customers have an improved shopping experience by not receiving irrelevant marketing,” she says. 

“We’re at early stages of growth over the next few years, which is certainly going to be rapid. Among the key drivers is the proliferation of behavioural data and a renewed focus on using that data more effectively. For brands, this means being able to target strategically, based on how the consumer is purchasing and interacting with their products,” says Hansjee.

Tightening the trust flywheel

“Categories like FMCG, electronics, and fashion are leading the charge in retail media network investment. These industries are recognising the importance of selling benefits rather than just features. By focusing on how their products enhance consumers’ lives, these brands build stronger connections with shoppers,” says van Vuuren.

“South Africa’s retail media landscape is rapidly evolving. To succeed, brands must shift their focus from product features to consumer benefits. By understanding the genuine needs of shoppers and communicating these benefits effectively, brands can thrive in the growing retail media ecosystem,” he adds.

De Korte says the future of data and personalisation in retail networks will be about: “Leveraging artificial intelligence (AI) to generate and optimise advertising creative. Dynamic creative optimisation is the ability to compile advertising messaging using multiple creative components and optimise the content to an individual customer’s preferences in real-time, meaning multiple different advertising creatives can be served catering to many different customers at the same time to optimise engagement and conversion.”  

“Our retail media business remains high growth and profitable. Our expectation is that in the medium term, retail media networks could comfortably get a 10% share of ad spend in South Africa, making it a multi-billion rand growth story for the industry,” she says.

Schreuder understood how to help Shoprite create a smarter flywheel, and that’s why the group is winning. And why Rainmaker Media is an integral part of the retailer’s money-spinning strategy.

Charles Lee Mathews is a contributing writer to MarkLives MEDIA and MarkLives  as well as co-founder of The Writers, a writing consultancy.  

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