Suzy Davidkhanian (00:06):

Hi everyone. Today is Wednesday, January 21st. Welcome to EMARKETER’s weekly retail show, Reimagining Retail, an EMARKETER podcast. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Suzy Davidkhanian, and on today's episode, we're exploring two of the trends from our Commerce Media Trends to Watch report, Bake Off style. Joining me in the studio, we have senior analyst, Arielle Feger, and principal analyst, Sarah Marzano. Hi, guys.

Arielle Feger (00:40):

Hey, happy to be here.

Sarah Marzano (00:41):

Hi, Suzy. Thanks for having us.

Suzy Davidkhanian (00:43):

Thanks for being here and in-studio. I love it when we're all in the studio. So if 2025 felt like a turning point for commerce media, that's because it was. We saw a wave of new entrants rushing in, while incumbents looked to add new levers, plus advertisers pushed harder for clearer measurement systems. And heading into 2026, the pressure only ramps up as budgets tighten and expectations rise. So today, we're breaking down two of the commerce media trends we think will matter most for what comes next, not just who's playing, but how this channel proves its value.

(01:17):

All right, so let's get into it. As a reminder, we've got three rounds, and round one is all about the signature take. This is where each of you has one minute to set the stage. Tell us your trend and what's the big idea behind it. Sarah, let's start with you.

Sarah Marzano (01:34):

So my trend is that in 2026, we're going to see retailers restructuring their retail media teams to bring them closer to their core operations. And for me, this really comes about because most retail media networks were built really quickly and in silos, which made sense at the start when the focus was purely on e-commerce. In e-commerce environments, you can do a lot with relatively a little. But more and more, retailers now are realizing that cracking in-store retail media is going to be a non-negotiable part of scaling, and that's making things more complicated. Moving into physical stores is harder, it's more expensive, it slows execution, it requires a lot more coordination from cross-functional teams, a lot more asking permission versus moving quickly.

(02:22):

And the challenge here is that most retail media teams are still operating as these standalone media businesses, largely because that's where they originally sat within their organization. And we've done research that shows that there's no dominant organizational structure for retail media teams, they've just grown up where they started within their organizations. But at the same time, we're hearing from retail media leaders that improving internal alignment is a major focus of the past year.

Suzy Davidkhanian (02:46):

So reorgs?

Sarah Marzano (02:48):

Exactly. Arielle, what about you?

Arielle Feger (02:49):

So my trend is that retailers are going to focus on hard-launching their in-store retail media capabilities, and they're going to do that through in-store takeovers, and also, I believe, some more experiential retail media. So obviously, we know in-store is where over 80% of purchases still take place. It would be completely insane for retailers to ignore that. As Sarah said though, it is very difficult to get the hardware, the infrastructure and so forth. So a lot of times, we're seeing people wait and see, we want to see if this really works. But in order to see if it works, you kind of have to go full into it. And so, I think this year, we're going to see people go more into in-store retail media, and they're going to do that with, like I said, in-store takeovers. So that's going to be through screens, through different surfaces, it could be in the store, it could be out of the store. But we're really going to see that start to take shape.

Suzy Davidkhanian (03:49):

So you're all about the in real life store experience?

Arielle Feger (03:52):

IRL.

Suzy Davidkhanian (03:53):

Awesome. So let's move to round two. This is where you're going to tell us how it technically plays out. We'll go deeper into your trend, so not just what the trend is, which you guys so eloquently already told us, but how is it going to show up throughout 2026? What are the changes? Who's impacted? What does this look like in the real world? Okay, Sarah, let's start with you again. Walk us through your trend and how you see it unfold over the year.

Sarah Marzano (04:19):

Okay. So I organized this into four really specific predictions.

Suzy Davidkhanian (04:23):

We love that.

Sarah Marzano (04:23):

So that we can really measure the progress for how this goes throughout the year. So the first prediction is that retail media moves closer to merchandising. So in this, retail media teams will shift closer to the groups that actually control things like pricing and assortment and promotions, because historically, when media has sat too far from those decisions, you can have strong advertiser demand, you can have the most beautiful retail media strategy, but still not see that translate into results. And we need to remember that retail media is a media business that sits on top of retail, we have to move product at good prices and satisfy our customers in order for it to work. So bringing media closer to merchandising is going to help align ads with how categories are actually planned and executed, and so it lines up the store experience, or even the website experience, with what consumers are seeing, and ties that back to ads more effectively.

(05:11):

And I want to point out, we started to see early signs of this in 2025. Large grocers, like Kroger and Albertsons, and even Ahold Delhaize, announced moves to reorganize their teams to more tightly connect retail media with merchandising, as well as loyalty and other commercial functions. My... Sorry, question?

Suzy Davidkhanian (05:30):

Yes. I was just going to ask you, so we know the traditional silos don't work, what group do you think is going to be most impacted by the reorg?

Sarah Marzano (05:38):

I think it'll be the retail media teams themselves. I think they're going to have to get used to new ways of working. Again, I think when you're working to launch a media or monetization program focused solely on a digital owned and operated property, like a website or an app, you can move relatively quickly and turn operating in a silo to your advantage. But that's just not going to work as we look to scale further into off-site, and specifically into physical stores.

Suzy Davidkhanian (06:01):

You might get into this later, but for me, it feels like, having come from the merchant office, it's like a giant step, it's like a whole shift in the operating model, and they might start to worry about their margin.

Sarah Marzano (06:12):

Yeah, and I think that's actually already happening. It's part of the problem, and this segues right perfectly-

Suzy Davidkhanian (06:16):

Oh, perfect.

Sarah Marzano (06:17):

... into my second prediction, so thank you for that, which is that incentive structures are going to become more cross-functional. So today, we've done research on this, most retail media teams are incentivized purely on ad revenue. And when that happens, it creates a real risk of reinforcing silos in the organization, just like you were hinting at, especially if that incentive structure can give the impression of success in a vacuum. So you're meeting your retail media ad revenue goals, but if that sits completely separately from meeting your margin goals or your top-line sales growth, then it becomes a zero-sum game, where the success of one team might be seen as coming at the expense of another team.

(06:53):

So in 2026, I think success is going to be defined less by ad revenue alone, and more by things like category growth and broader commercial impact. And I think we're going to start to see retailers introduce shared KPIs, so that media, merchandising, e-commerce and store teams are all working towards shared mutually-understood goals.

Suzy Davidkhanian (07:11):

And then, what about using co-op money to get rid of merch? What do you think is going to happen with that? It's just going to be a shared responsibility, I guess, everything will be shared.

Sarah Marzano (07:18):

Yeah. I mean, I think it's very likely that these things are going to start being looked at holistically. I think the benefit of retail media is it provides more, in an ideal world, transparency and reporting, so that advertisers or brands can understand where their money is going. And that's a real difference to the way co-op money has been managed by merchant teams in the past. So I think there's a challenge there. But I think the opportunities, that if these things can be managed holistically and planned for and reported on more effectively, then we can make sure that the money flowing into a retailer is going to the very best tactic to move product at the right time, in the right place, at the best price.

Suzy Davidkhanian (07:54):

Yeah. And because we know that roughly 60% of dollars are flowing through search, which could help move the product without using co-op money.

Sarah Marzano (08:01):

That's true, yep.

Suzy Davidkhanian (08:02):

I love it.

Sarah Marzano (08:03):

I have two more predictions, I'm sorry, if that's okay.

Suzy Davidkhanian (08:04):

Oh, please keep going. No, yes, of course. We love hearing about this.

Sarah Marzano (08:07):

Okay. My third prediction, and I think it's interesting, Arielle, both our predictions are underpinned by this need to act on the huge potential for in-store. And so, I think in-store retail media is going to be the force that really forces that organizational change. And I think we're going to see this play out specifically from retailers that have larger store footprints and maybe relatively smaller e-commerce businesses, because they're the ones that are recognizing, in order to make this retail media thing work, we're going to have to figure out how to monetize our physical stores. And so, this is where we start to expose the limits of those siloed teams and see the need to have tight coordination with merchants and store operations readily available, especially when it comes to how the shelves are stocked.

(08:48):

And my last prediction, I think it's a result of these other things playing out, is that retail media will gain more credibility inside of their organization. So this is based on more research that we did in 2025. We found that most retail media team leaders felt really confident in their strategy, but when we asked them if they felt that their broader organization in turn believed in their retail media strategy, that confidence really fell off the cliff. So to me, that gap shows up as slower decisions, uneven internal support, and difficulty launching things like in-store retail media. And I think as we see these organizational changes roll out, we're going to see that confidence gap start to close.

Arielle Feger (09:26):

It's really interesting how many of those things are so closely tied together and reinforcing each other, because I do agree, as the channel grows, the confidence needs to grow with it and there needs to be all of these other things. So it's really interesting that they're all very interlocking.

Sarah Marzano (09:41):

Yeah, absolutely. None of it can happen without the entire organization really having a belief in retail media, because it's going to require investment. Another thing retail media teams told us was that they feel these really acute talent shortages in crucial areas that they need in order to establish credibility and expertise and keep growing, and again, that's going to require organizational belief to fuel the investment necessary to close those gaps.

Suzy Davidkhanian (10:03):

And I liked what you said in the beginning, it's moving from experimentation to a more permanent revenue stream, so everybody has to band behind it. But tell us about... I mean, a lot of these organizations have a loyalty team, what'll happen to that team and all the data that they sit on? And will that work together, is that part of the vision of the reorg?

Sarah Marzano (10:20):

Absolutely. And I think from the retailers that I mentioned already, Kroger really notably moved their media team and their loyalty team under the same division-

Suzy Davidkhanian (10:29):

Into one.

Sarah Marzano (10:30):

... so they're working more closely together, they're reporting to the same leadership, and those are some of the earliest steps in terms of uniting retail media into the broader strategy. So I think loyalty, marketing and merchandising are some of the core internal functions where we're going to see reorgs working to bring media closer into the mix.

Suzy Davidkhanian (10:48):

Love it. What about you, Arielle, what's your trends?

Arielle Feger (10:51):

Yeah. So I don't have quite as many predictions this year.

Sarah Marzano (10:54):

Sorry.

Arielle Feger (10:56):

But I do have a few different ways that this is going to unfold. One of the ways is we're going to see turnkey takeover packages become part of retail media networks'' offerings. I think Best Buy has already started to do this with its takeover packages, which include physical displays, digital walls, interactive screens and checkout counters. So there's really a cohesive thing, where brands don't have to pick and choose, they can really have the entire takeover package and it can really make a big splash in-store.

(11:36):

We're also going to see this expand not just to the actual inside of the store, but outside of the store as well. An example from this year that I thought was really cool is Oreo did a really interesting out-of-home advertising campaign with Kroger, and they did... It's in the crosswalks outside of their store.

Suzy Davidkhanian (11:56):

Loved that one.

Arielle Feger (11:56):

Yeah, it's really cool. The crosswalks, essentially, it's a very simple design, it looks like a character eating Oreo cookies, but there's also a QR code that gives them an offer inside the store. So I think we're going to start to see these creative ways of making your brand known throughout the store, and then incorporating maybe some of those elements, like shoppable elements, QR codes, et cetera.

(12:22):

The other thing, and this is a different prediction outside of Sarah's report that I'm going to throw in here because I think it makes a lot of sense, I think there's going to be more experiential retail media, and Dollar General had a really good example of this. This year, they partnered with a company called Recess, and this was actually completely outside of the store itself. They went into the community and they gave out samples, and it was really targeted to very specific things. And I think Dollar General, I think, is a really good example of a retailer with a hard-to-reach niche audience. And so, I think we're going to start to see, as Sarah said, these retailers with a larger physical footprint really start to get more innovative with their in-store retail media and play with it a little bit to really show that it is working and that it can move the needle.

Sarah Marzano (13:12):

I think what's fascinating here is it feels like this linear step-change in the way stores have approached in-store retail media. Whereas historically, it's been these specific formats that are in this tight-knit group of pilot stores, and even though the press releases might feel big, the actual execution has felt a little bit quiet. And so, I think the retailers who have been investing in these small ad hoc tests are now going to start putting all the pieces together. And it's still going to happen in a really concentrated way, it might be one or just a handful of stores where we see these really immersive takeover packages take place, but the point is going to be to say, "Hey, let's show our homework. Here's all the work that we've been doing on developing these ad formats, measuring these ad formats, and here's the power it can bring to an advertiser."

(14:01):

And I think there's that external messaging around, "Here's the power of in-store retail media as a channel," as well as internal signaling that needs to happen, so that retail media teams can showcase to their leadership, "Look what we could do and look what we should be doing at scale." So I think this is a fascinating the next chapter, it's not necessarily going to be the year where in-store digital media goes mainstream, but this is going to be the next step in that evolution.

Suzy Davidkhanian (14:28):

For me, it's the experiential part that's cool, because that goes beyond feeling like you're being advertised to, for it to feel like an activation and a little bit more of a natural extension of the store versus being sold to. And on the retail front, in our retail trends, we said that with AI, the store is going to become even more important. And we know that it's definitely an under-monetized channel, there's so much traffic, and as we all know, 80% of sales are in a store.

(14:53):

But I think the one part that I'm still missing, and I'd love you guys to, Arielle, starting with you, give me your perspective on how do we account for that sale though? How do we know what the right window of time is before we say, "They were in the store, they saw the activation, they bought it three weeks later, seven months later"? How do we help our listeners better understand that closing the loop? We talk so much about the funnel, the full funnel, they're not always being optimized, but that measurement piece is critical.

Arielle Feger (15:23):

Yeah. So it is something that retail media networks are still working on, is how to not only tie the sale to the in-store activation, but also to show that it's incremental, which is what everyone wants to know. Albertsons actually just recently announced that they've created a new incrementality measurement tool in efforts really to hone in on this. And I know Albertsons has definitely been on the forefront of trying to nail down measurement, which has been notoriously difficult. So I certainly don't think I have all of the answers, but I think it's something that we're going to see a lot more in-store measurement focus this year.

Sarah Marzano (16:07):

Yeah. I think this is something the industry definitely has its work cut out for it, and I feel very grateful to industry bodies, like the IAB, who are putting a lot of work together around building standards for in-store retail media measurements and even things like how to define an impression. And this is going to be really difficult. One of the fascinating things is that there are all different types of formats for in-store retail media. Some of them enable one-to-one measurement and attribution, like smart carts, where you have to be an authenticated user and you're being shown an ad and then scanning products as you put them into the cart. And there are other formats that I actually believe in, but that are inherently blunter instruments, like in-store audio.

(16:47):

And one of the biggest challenges, and I won't say that we've painted ourselves into a corner with it, because I think it is solvable, but retail media ad buyers have grown up in digital ecosystems, they're used to robust attribution and being able to close the loop, and they're going to demand similar results from their in-store investments. In fact, I just presented some insights at NRF showcasing that the buyers who are currently investing in in-store today say that better measurement and attribution is the number one enhancement that would lead to them investing more. So it's absolutely something we're going to have to keep working on.

Arielle Feger (17:25):

I think this ties back to your trend, which is this more holistic organizational part that needs to happen. And I think, thinking about Kroger with its loyalty, its retail media and all of those insights coming together, I think that's only going to help and make it stronger, and being able to be on the same page within the organization will then help being on the same page for advertisers as well.

Suzy Davidkhanian (17:49):

And I smile when you talk about audio, because I'm like, "I don't know about audio." But I understand what you're saying.

Sarah Marzano (17:54):

You're always an audio naysayer.

Suzy Davidkhanian (17:56):

Only because we hear the music in the... It's like tracks in the music, and I have a hard time believing that the audio is going to send me to buy Oreo cookies versus the cartoon on the floor of a sidewalk.

Arielle Feger (18:07):

Couldn't you say that about TV though, commercials? I feel like at this point-

Sarah Marzano (18:10):

Yeah. Plenty of consumers say, "I pay no attention to TV commercials."

Suzy Davidkhanian (18:13):

So I think we see the commercial... I mean, I'm not an expert, but I would say we see the commercials enough that there's recall that happens, versus you don't go to the store that often-

Sarah Marzano (18:21):

Audio is a medium where consumers have some of the strongest recall.

Suzy Davidkhanian (18:24):

Really? In a grocery store? Wow. Well, I stand corrected, which moves us from... I still don't know that it's the best medium. I think QR codes, anything where there is a click-through-

Sarah Marzano (18:33):

I think there should never be an in-store retail media network that relies on audio and audio alone, except maybe in a C-store, actually, where in that environment, I could see it working really well. But then, for the most part, I think it's going to have to be layered.

Suzy Davidkhanian (18:45):

Together is best, like sampling or something.

Sarah Marzano (18:46):

Yeah. To Arielle's point around experiential, I think that's going to be one of the biggest unlocks, is how do you take this really three-dimensional immersive experience that is shopping in-stores and put all the pieces together? So maybe you have the Oreo crosswalk as you walk into the store, and then you have a digital sampling station or traditional sampling station, and then you have audio telling you-

Suzy Davidkhanian (19:06):

Yes, it's the layer piece.

Arielle Feger (19:07):

The more senses you can involve, I learned this in college.

Suzy Davidkhanian (19:10):

That's right.

Arielle Feger (19:10):

The more senses you involve, the better off someone's going to remember it.

Suzy Davidkhanian (19:13):

That's very true. And so, I know we're moving away from the proof-of-concept stage into reality, and this is it, we've got to figure it out. Tell me, before we wrap this segment, is there a surface that is more optimal, or is it really that layered piece? Is the parking lot better? Is the sidewalk better? Is the digital screen better? Is the audio better, the sampling?

Sarah Marzano (19:33):

I have a whole chart about this. I don't know if we can link it in the show notes or something like that.

Suzy Davidkhanian (19:38):

We can. I can use it.

Sarah Marzano (19:39):

But I think what's fascinating about in-store retail media, and I was getting at this, is that there's such a diverse array of formats, and it's going to unfold really differently than online. The way consumers shop on websites is relatively homogenous, and it makes sense to say your retail media program on your website should have sponsored search, should have display ads. But when you think about how consumers shop in physical stores, their behavior really differs depending on the type of store environment you're in.

(20:03):

So something like a smart cart, to me, makes a lot of sense in a grocery store, but it makes a lot less sense in a C-store, where it's a smaller basket size, you have less room to move around the store. I think mobile app connectivity makes a lot of sense in a big box store or a home improvement store, where maybe you have more product to navigate or need more information in order to build the confidence to purchase. So there isn't one playbook for in-store, and I think what's going to be really important is for retailers to think through what is our in-store environment like, and what are the technologies and surfaces that could actually enhance our consumer shopping experience?

Arielle Feger (20:42):

That's what I was going to say. I feel like whatever it is, it's got to add value and not distract. And so, I could think there is no one format that's going to be the format that's going to work. But a layered approach, I think, is the best option, where you're having it all work in concert together to really reinforce the message.

Suzy Davidkhanian (21:03):

Speaking of reinforcing the message, round three is where you're going to give me your show stopping argument. This is where you give me your strongest case, why your trend is the one to watch in 2026. This is your closing argument, your signature flourish, your, "this is why I'm right" moment. Sarah, take it away.

Sarah Marzano (21:24):

Okay. Retail media gets a lot of attention because of its top-line numbers, they're really impressive. We're forecasting over $70 billion in ad spending this year, and by 2029, we're forecasting that retail media alone will make up about one-fifth of all digital ad spend. But the fact is it's still concentrated to primarily one player. When you strip Amazon out of the ad spend numbers, we're looking at about $14 billion this year and between 3% to 4% of digital ad spend. So that tells you that we're actually still very early, even though it feels like we've been talking about retail media for a long time. Most retail media dollars is still concentrated in e-commerce environments, but as we've mentioned on this podcast, most sales still happen in physical stores. So that's really the critical unlock to activating the majority of retailers. But moving into in-store is not just a retail media problem, it's an organizational one, and that's why we have to restructure these organizations to build for that future success.

Suzy Davidkhanian (22:17):

Arielle?

Arielle Feger (22:18):

i mean, Sarah already laid out some of my argument for me, so that's really easy. I mean, the in-store piece is critical, we can't ignore the fact that the majority of sales still take place there. And I think that to, again, secure the confidence of both internal and external stakeholders, retailers are really going to have to bring it this year and really try to make the in-store retail media experience work for both consumers and advertisers.

Suzy Davidkhanian (22:48):

And the winner is... Is there a drum roll?

Sarah Marzano (22:51):

Wait, is there a winner?

Suzy Davidkhanian (22:52):

Yes.

Arielle Feger (22:52):

Yeah, I mean...

Sarah Marzano (22:53):

I thought the jury was out on that. Okay, who is it?

Suzy Davidkhanian (22:56):

Well, that's the thing, you guys. I don't think the trends can happen in a silo and they have to go together.

Arielle Feger (23:02):

Completely agree.

Suzy Davidkhanian (23:02):

Even in the way you were describing your closing argument, everything is so inter-tied.

Sarah Marzano (23:08):

It's true.

Suzy Davidkhanian (23:08):

Originally, being an ex-merchant, I was like, "Yeah, they have to figure out how to work together, and so reorganizing." But at the same time, everybody knows how much I believe in the store, 80% of sales are in a store, and so it's really truly a missed-out-on footfall if you don't figure out how to turn that into an engaging environment for help with sales.

Sarah Marzano (23:28):

This is so suspenseful.

Suzy Davidkhanian (23:30):

So I think it's a tie.

Sarah Marzano (23:31):

Oh, Jesus.

Arielle Feger (23:33):

Yeah.

Suzy Davidkhanian (23:33):

That's all the time we have here.

Arielle Feger (23:39):

I like a tie. It is all from your brain, so you are the winner. I'll lose a little bit for my brain too.

Sarah Marzano (23:43):

Yay.

Suzy Davidkhanian (23:44):

No, you cover this all the time. I just read your article that you published a couple of weeks ago around the different predictions that you have.

(23:50):

That's all the time we have for today. Thank you, Sarah.

Sarah Marzano (23:53):

Thank you for having me.

Suzy Davidkhanian (23:54):

Thanks, Arielle.

Arielle Feger (23:54):

Thank you.

Suzy Davidkhanian (23:55):

And thank you, listeners, and to our team that edits the podcast. Please leave a rating or a review and remember to subscribe. I'll see you for more Reimagining Retail next Wednesday. And on Friday, join Marcus for another episode of Behind the Numbers, an EMARKETER podcast. The end.

Sarah Marzano (24:14):

Marcus, say something nice.

Suzy Davidkhanian (24:17):

That's his nice.

Marcus (24:18):

Victoria, I'm going to miss you a lot.

Sarah Marzano (24:19):

Aw.

Suzy Davidkhanian (24:22):

Aw. Thank God the pony is on the...

Speaker 5 (24:23):

[inaudible 00:24:25] can we do a quick mic check?

Suzy Davidkhanian (24:25):

Yeah.

Sarah Marzano (24:26):

Hello.

Suzy Davidkhanian (24:27):

Hi.

Arielle Feger (24:28):

Hello, hello, hello.

Sarah Marzano (24:29):

Hi, hi, hi. All at the same time, right?

Arielle Feger (24:30):

Yeah, that's not helpful.

Sarah Marzano (24:31):

Right? We're harmonizing.

Suzy Davidkhanian (24:39):

Guys, that was so beautiful.

Sarah Marzano (24:43):

We're starting an EMARKETER band.