The Retail Media Ecosystem in Europe
The retail media ecosystem resides in the space between consumers and brands. Where it was traditionally occupied solely by retailers, the online dimension is now occupied by a system of on- and offline retailers, marketplaces, ad tech and agencies.
Retail Media is gathering momentum in Europe.
Let’s understand why?
Reason #1: Decreasing margins for retailers
Grocery stores operate on incredibly slim margins, often between 1 and 2%. As a result, even the smallest change to the balance sheet can have a huge impact on profitability.
No wonder then that the margins of up to 80% from retail media, as well as driving sales and satisfaction through relevance and personalization, make this new retail revenue opportunity particularly attractive.
Reason #2: The cookieless “future” has finally arrived.
When Google does bring that order into effect in 2023, advertisers will no longer be able to implement audience targeting on around 99% of Chrome users (or, two-thirds of the world’s internet users based on current browser trends)
That has huge implications for advertisers, which rely on that data to plan their online campaigns effectively.
With data coming direct from retailers, brands have a direct route to communicate with real shoppers at a crucial moment on their buying journey.
Reason #3: CPGs want more control and insight over their ad spend.
Retailers aren’t the only ones facing challenges. CPGs have endured a similarly disruptive couple of years, bookending what has been an already turbulent decade.
Even before the pandemic, CPGs were struggling to grow. Aggregate revenue growth across the largest food and drink suppliers was just 1.9% in 2019, down from 4.3% in 2018.
| 2018 | 2019 | Difference | |
|---|---|---|---|
| Aggregate revenue growth of CPG | 4.3% | 1.9% | -2.4% |
Source: The Grocer, October 2020
| 2000-2009 | 2010-2019 | Difference | |
|---|---|---|---|
| Profit growth of CPG per year | 10.4% | 3.2% | -7.2% |
Source: McKinsey, July 2020
Other than a select number of brands that sell direct to consumer, CPGs are naturally dis-intermediated from shoppers. As a result, while the world’s 10 largest packaged goods brands spend around $800m on advertising per year, their customer database is around 90% smaller than the retailers they sell through. (Source: BCG, August 2020)
80% of the information that CPGs do have goes un-mined, meaning that valuable insights are being missed (Source: Customer Data Analytics and Insights – Treasure, August 2020).
Perhaps worse, more than half of those businesses say that their retail partners don’t share their customers’ behavioural data with them. (Source: Deloitte, June 2020)
Retail media ad spend growth in Europe
According to Statista, this will be the digital retail media ad spend growth in Europe from 2019 to 2026 (in billion euros)
| in billion euros | YOY growth | |
|---|---|---|
| 2019 | 4,3 | |
| 2020 | 5,6 | 30% |
| 2021 | 7,9 | 41% |
| 2022 | 9,7 | 23% |
| 2023* | 11,9 | 23% |
| 2024* | 16,1 | 35% |
| 2025* | 20,6 | 28% |
| 2026* | 25,1 | 22% |
Source: Statista
The Retail Media Ecosystem in Europe
The big global pure players, local pure players, vertical marketplaces, and click-and-bricks make up the European marketplace scene. Amazon is still the world’s first online marketplace, as well as the world’s largest and most popular retail advertising platform but other marketplaces, more local or vertical ones, are growing and offering more and more services to brands who want to boost their visibility and sales on their platforms.
This wide range of marketplaces is very specific to the European market, which is particularly fragmented. This diversity of marketplaces represents an opportunity for merchants to target their audience more efficiently and also to reduce their dependence on just one or two players.
The leading players differ by country (Cdiscount in France, OTTO in Germany, OnBuy in the UK, Bol.com in the Netherlands…) but they all have one thing in common: they’re all retail media enabled.
While European market fragmentation is sometimes seen as a barrier to entry and expansion, this is not true for retail media. The diverse range of languages and consumer digital shopping habits allows for both national and vertical champions to develop, which can then scale internationally.
Given retail media’s symbiotic relationship with ecommerce, the sheer size of the ecommerce market should whet the appetites of those exploring this emerging channel.
The increasing trend of online shopping is the major factor that is expected to drive the retail media market growth over the forecast period.
What does the ecommerce landscape look like in Europe?
| Population (in million) | Ecommerce predicted revenue 2023 (in $bn) | |
|---|---|---|
| United Kingdom | 67 | 176,4 |
| Germany | 83 | 131,5 |
| France | 67 | 94,4 |
| Spain | 47 | 38,5 |
| The Netherlands | 17,5 | 31,9 |
| Italy | 59 | 53,8 |
| Poland | 37 | 17,3 |
TOP eCommerce Companies (in $bn)
| Position | Company | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| 1 | Alibaba | 802,3 | 942,0 | 1123,2 | 1249,0 |
| 2 | Amazon | 278,6 | 337,6 | 491,9 | 602,0 |
| 5 | eBay | 88,3 | 88,3 | 87,6 | 85,0 |
| 9 | Mercado Libre | 12,5 | 14,0 | 20,9 | 28,4 |
| 16 | Zalando | 6,6 | 8,2 | 10,7 | 14,4 |
| 17 | Wayfair | 6,8 | 9,1 | 14,1 | 13,7 |
| 18 | Etsy | 3,9 | 5,0 | 10,3 | 13,5 |
Source: GroupM, Company Filings
European Ecommerce Vertical marketplaces
| Vertical Marketplaces | Industry |
|---|---|
| Zalando | fashion |
| ManoMano | DIY & gardening |
| MediaMarkt | consumer electronics |
| Wayfair | furniture |
| Fnac Darty | consumer electronics |
| About You | fashion |
| IBS.it | books |
| PC componentes | computers |
European Ecommerce national pure players
| National pure players | Country |
|---|---|
| Allegro | Poland |
| Cdiscount | France |
| BOL | Netherlands |
| Onbuy | UK |
| ePrice | Italy |
European Ecommerce Grocery Retail Chains
| Grocer | Country |
|---|---|
| Tesco | United Kingdom |
| Carrefour | France |
| Wehkamp | Germany |
| Sainsbury | UK |
| Leclerc | France |
Now, let’s break it down by country. Included in this post you will find data from UK, Germany, France, Spain, Italy, The Netherland and Poland:
UNITED KINGDOM
eCommerce revenue development in the Food & Personal Care market in the UK
- The UK Food & Personal Care eCommerce market is predicted to reach US$43,614.9 million by 2023 and accounts for 24.7% of the total eCommerce market in the United Kingdom.
- The expected CAGR (2023-2027) will be 11.4%, resulting in a projected market volume of US$67,177.2 million by 2027.
- With sales in the UK Food & Personal Care market, tesco.com generated a revenue of US$6,123.5 million in 2021, which means it is the leading online store in this market.
- In second place is sainsburys.co.uk with a revenue of over US$4,004.2 million, followed by ocado.com with a revenue of US$2,513.1 million.
- Altogether, the top three online stores account for a market share of about 49.5%.
Source: ecommercedb.com
TOP Ecommerce sites for retail media in UK
- Amazon
- Sainsbury
- Ocado
- Tesco
- eBay
- etsy
- Wayfair
- Onbuy
- Manomano
- Zalando
GERMANY
eCommerce revenue development in the Food & Personal Care market in Germany
- The German Food & Personal Care eCommerce market is predicted to reach US$26,959.1 million by 2023 and accounts for 20.5% of the total eCommerce market in Germany.
- The expected CAGR (2023-2027) will be 13.1%, resulting in a projected market volume of US$44,132.0 million by 2027.
- With sales in the German Food & Personal Care market, amazon.de generated a revenue of US$992.8 million in 2021.
- In 2nd place is docmorris.de with a revenue of over US$927.0 million, followed by douglas.de with a revenue of US$637.5 million.
- The top 3 online stores account for a market share of about 27.3%.
Source: ecommercedb.com
TOP Ecommerce sites for retail media in Germany
- Amazon
- Zalando
- Douglas
- Otto
- eBay
- Etsy
- About You
FRANCE
- The French Food & Personal Care eCommerce market is predicted to reach US$21,033.4 million by 2023 and accounts for 22.3% of the total eCommerce market in France.
- The expected CAGR (2023-2027) will be 14.0%, resulting in a projected market volume of US$35,543.6 million by 2027.
- With sales in the French Food & Personal Care market, coursesu.com generated a revenue of US$626.6 million in 2021.
- In 2nd place is auchan.fr with a revenue of over US$580.1 million, followed by carrefour.fr with a revenue of US$348.7 million.
- The top 3 online stores account for a market share of about 29.2%.
TOP Ecommerce sites for retail media in France
- Amazon
- Carrefour
- Cdiscount
- Auchan
- Fnac
- Leclerc
- AliExpress
SPAIN
eCommerce revenue development in the Food & Personal Care market in France
- The Spanish Food & Personal Care eCommerce market is predicted to reach US$9,956.0 million by 2023 and accounts for 25.9% of the total eCommerce market in Spain.
- The expected CAGR (2023-2027) will be 14.9%, resulting in a projected market volume of US$17,371.2 million by 2027.
- With sales in the Spanish Food & Personal Care market, mercadona.es generated a revenue of US$447.2 million in 2021, which means it is the leading online store in this market.
- In second place is carrefour.es with a revenue of over US$290.5 million, followed by amazon.es with a revenue of US$286.1 million.
- The top 3 online stores account for a market share of about 32.6%.
TOP Ecommerce sites for retail media in Spain
- Amazon
- PC Componentes
- Carrefour
- MediaMarkt
- El Corte Inglés
- eBay
- AliExpress
THE NETHERLANDS
eCommerce revenue development in the Food & Personal Care market in the Netherlands
- The Dutch Food & Personal Care eCommerce market is predicted to reach US$6,158.2 million by 2023 and accounts for 19.3% of the total eCommerce market in the Netherlands.
- The expected CAGR (2023-2027) will be 14.4%, resulting in a projected market volume of US$10,558.3 million by 2027.
- With sales in the Dutch Food & Personal Care market, ah.nl generated a revenue of US$1,135.7 million in 2021.
- In 2nd place is jumbo.com with a revenue of over US$623.4 million, followed by etos.nl with a revenue of US$264.1 million.
- The top 3 online stores account for a market share of about 50.7%
TOP Ecommerce sites for retail media in The Netherlands
- BOL
- ah
- jumbo
- etos
- Amazon
- Zalando
- MediaMarkt
- About You
- eBay
ITALY
eCommerce revenue development in the Food & Personal Care market in Italy
- The Italian Food & Personal Care eCommerce market is predicted to reach US$11,004.1 million by 2023
- It accounts for 20.4% of the total eCommerce market in Italy.
- The expected CAGR (2023-2027) will be 11.0%, resulting in a projected market volume of US$16,702.6 million by 2027.
- With sales in the Italian Food & Personal Care market, esselungaacasa.it generated a revenue of US$607.9 million in 2021.
- In 2nd place is amazon.it with a revenue of over US$316.9 million, followed by unieuro.it with a revenue of US$118.0 million.
- The top 3 online stores account for a market share of about 30.9%
- TOP Ecommerce sites for retail media in Italy
- Amazon
- esselungaacasa.it
- eBay
- ePrice
- Zalando
- Manomano
- Etsy
POLAND
eCommerce revenue development in the Food & Personal Care market in Poland
- The Polish Food & Personal Care eCommerce market is predicted to reach US$3,009.8 million by 2023
- It accounts for 17.4% of the total eCommerce market in Poland.
- The expected CAGR (2023-2027) will be 13.3%, resulting in a projected market volume of US$4,957.9 million by 2027.
- TOP Ecommerce sites for retail media in Poland
- Allegro
- Zalando
- AliExpress
- Amazon
Conclusion:
A substantial amount of retail media revenue is – and will continue to be – generated through sales to consumer packaged goods (CPG) brands. While Amazon attracts ad revenues from a wide variety of sources, the majority of grocery media revenues are driven by CPG brands, understandably eager to reach out to shoppers in as many ways as possible as they move through their retail journeys.
The TIER 1 Grocers in Europe are already getting ahead, developing their own Retail Media Platforms in-house.
Tesco Media and Insight Platform
While retail media is not new to Tesco, having been helping brands understand shopper behaviour through customer insight for over 20 years, they continue to evolve their offering with the launch in November 2021 of Tesco’s Media & Insight Platform.
Fuelled by insights generated from the 20 million-strong base of Clubcard holders, the platform helps brands with category development, new product innovation, and multi-media measurement.
Carrefour Links
Carrefour Links was co-developed with vendors including Criteo, Google, and LiveRamp. The platform is the result of a major digital transformation programme by the French retailer, and the culmination of three years of work that saw it hire hundreds of data scientists while transitioning 25% of its software applications to the cloud.
Links is built around a “Four Cs” proposition – capture, convert, converse, and comprehend.
Can regional retailers get their share of the $100 bn retail media revenue market?
The truth is, brands can’t afford to write them off, but retailers can’t afford to build their own platforms. They are on a steep learning curve about this. Strong and ambitious regional players need to partner up – possibly join networks created by others to effectively compete and capture a part of this margin-rich market.
Loyalty programs are being used as a cornerstone of retail media in EMEA.
