Forbes Magazine’s April 11 Article Discloses the Retail Media Problem:

The Truthful Fact: Major retailers are in love with the incredible impact of Retail Media Advertising on their bottom line — John David Rainey, Walmart’s Chief Financial Officer, recently disclosed that advertising and membership together represented “a little more than a quarter of the overall operating income” for the company in Q4 2024.

Walmart’s Vendor Intimidation: Walmart is pushing brands to increase their retail media spending by 25% year-over-year as part of joint business plans, despite many brands reporting stagnant sales growth from these investments. According to ADWEEK, brands are being asked to commit to additional media spend targets or risk losing key benefits in their supplier relationship with Walmart.

The Vendors Delima: One CPG brand executive told ADWEEK that despite tripling their spend on Walmart over the past three years, they’ve seen only moderate sales growth—in some years even experiencing a decline in market share. Another reported little to no growth in top-line sales or overall volume despite increasing investments.

What are the key take aways from the Forbes article?

1.      Retail Media is a profit center for the retailers – Very profitable

2.     Retail Media has become a ‘Pay to Play’ issue for the brands

3.      Retail Media has not proven viable for many of the brands

4. There is no downside to the large powerful retailer regardless of sales results

5.     Walmart’s insistence that their branded suppliers up their commitment illustrates that selling Retail Media is becoming a ‘hard sell’ to some suppliers.

Consider this question:A vendor may want to ask the retailer with a Retail Media program; “How much are your investing in your Retail Media program for your own private label program?” Think about it — Why would a large home center chain wih great high margin private label tools forfeight the expsure on its own Retail Media program in preference to name brand low margin tools? There something illogical here.

Negotiate in Good Faith: I understand that retail negotiations are necessary to ‘peel the onion’ in an effort to maximize buying power. However, there is a natural tendency to ask more and more until the demand kills the proverbial ‘goose that lays the golden egg’. Every vendor must keep a score card that accumulates the numbers for co-op advertising, rebates, new store discounts, slotting fees, point of sale displays, promoters, etc. For every discount requested there must be a win/win benefit for both retailer or vendor. Otherwise, the discount must ultimately built into the landed cost of the products. A smart retailer always works to drive costs down.

Focus on the Customer: Furthermore, there is a real danger when the retailer falls in love with a factor in the business that diverts attention for the focus on merchandising which I define as, “The Constant Pursuit of New and Beter Ways to Delight the Customer and Create Increased Sale Revenue.”  — Remember the Sears which was at one time the biggest and greatest retailer until they fell out of love with merchandising and fell into love with their income from Malls, Credit Cards, and Banking Services. Walmart is the biggest and greatest retailer today. HMMM.