Alright.

Hello everyone, this is Omnitalk Retail.

I'm Chris Walton.

And I'm Man Mazinga.

And we are coming to you live once again.

It's day two of NRF and we are once again in the Vusion Group's podcast studio that you can find in booth number 4938.

Come on in, stop by, check out all the great tech and come and say hi to us too, because we'd love to meet our fans.

All right.

Joining us today, Anne, is Robert Jozic, the SVP of Schwarz Media and Group Digital Strategy.

Robert, welcome to omnitalk.

Yeah, thank you.

Thank you for having me here.

Yeah.

Well, do you mind, Robert, just giving us a quick background on the Schwartz Group for those in our audience who may not be familiar with it.

Yeah.

Just to put the Schwarz Group in the context, Schwarz Group is the largest European retailer with a revenue of about US$170 billion, which actually puts them on number fourth position worldwide.

And important to mention, we have had very decent growth with a CAGR of greater than 8 for the first quarter of this century.

With our banners, Lidl, the discounter and the grocery format, Kaufland.

We're primarily focusing on three strategic directions, which is food, because we're a food retailer, then circular economy, so cradle to cradle and digitalization.

Oh, go ahead.

No, I was just going to say give us a little bit of background about your role then there.

What do you do at the Schwartz Group?

Yeah, I'm responsible since seven years for the digital strategy, for the ecosystem.

So everything of what's about partnering in the digital context and new business models.

And for one of those business models, the retail media business, I'm the responsible MD as well, since three years.

It's a big, big responsibility, Robert.

It is, but it makes tons a lot of fun, I can tell you.

Well, 8%, that's what we call a raging kegger over here in the States.

Robert, congratulations on that.

Those numbers are impressive.

All right, so you're speaking at nrf.

What are the key messages that you shared or what are you hoping to tell the audience while you're here?

Yeah, actually, of course, it's about retail media and there's a lot of noise out there in the market and it's also very difficult to catch the true narrative of what retail media is truly about.

We would agree.

Yeah, exactly.

No doubt.

Yeah, no doubt.

So, and the title of the presentation was Retail or Media Strategic Turning Point, which actually shows of what are the main strategic considerations for actually giving your retail media business a Corresponding direction.

Why a lot of trade marketing funds are actually also factored into retail media products, which is looking from the outside more of a left pocket, right pocket game.

Might also call this brown dollars because you see in a lot of analysis at those kind of retail media models that they show very rapid growth in terms of ad revenues, but you don't find actually any kind of effects in the gross margin overall.

So the literally the needle is not moving right.

And this has actually the main reason behind this is the fact that trade marketing funds are flooded into, which is per se, not negative because it's part of the digitalization of the retail business.

So you're replacing the physical handbill with the virtual one.

You replace the billboard against a digital screen.

That's all.

Okay.

But of course you need to have a very close look on your net growth and the earnings.

So the stock market and analysts I think have already started to realize that it's a different game running retail media on a marketplace like the top three retail media players do, Amazon, Alibaba, Pinduoduo or well, better known as temu.

But of course that's a complete different kind of vertical.

You're settling your advertising business on top.

Whereas the chances are not only referring to having trade marketing funds being transferred to retail media and actually what's part of a red ocean game, because you're in this kind of game since years and it's limited by the units sold.

From the CPG point of view, it's actually also more about the historical chance.

And that's really something which I've reconsidered a couple of times in terms of is it really historic yet?

It is, because the retail business can actually truly contribute in a very valuable way to the media business.

And we see this one already starting.

And if you have a look on all of those activities running in parallel, I think we'll have a lot of topics here to mention.

Got it.

So if I recap what you said.

So basically you're saying like retail media is, is part and parcel the effect of the digitization of retail.

And so the move towards retail media could be having a net positive impact on the revenue that's generated and the margin for a given retailer.

But you still have to be careful of how much is truly incremental at the end of the day.

Is that right?

Jeff, do you have an idea of the extent or the proportion of which is of how much is truly incremental or something you can share with the audience in that regard?

I think it's very difficult to do that without mentioning concrete examples.

But see a lot of public listed retail companies actually are compared against the big players and have actually to come up with corresponding figures.

But I can only give the advice, just analyze.

I mean, if you see a rapid growth pattern in retail media revenues for a retail media business just about or just recently started, then this is a clear indication that there is already money attracted in a very short time frame.

Which actually tells you or actually gives you an indication that this is probably coming out of recent trade negotiations.

Which is okay, right?

Because before we started, you actually said something that was really interesting to Ann and Mead.

You said that generally speaking of startup or retail media business, there's a time lag in terms of how long it takes you to actually get the media dollars.

What is that time lag in your estimation?

When you actually focus your retail media offerings not towards trade, but towards media, which actually requires five steps we can later on go through quickly.

It actually takes you between 12 to 18 months.

Why?

Because that's the time the advertisers need actually to consider you being an integral part of their media plan for the next year.

And usually they hand this over to media agencies and that's actually the natural latency.

But the benefit is that this is 200% incremental from the retailer's point of view.

Because a retailer was not in the media business ever before.

They were never getting those dollars.

The media companies were getting those dollars.

And we have a lot of discussions, right, about those kind of commercials and whether it pays off, yes or no.

But the most important part is which kind of strategic direction you give to your team and of course also to your business.

Especially when it's then about setting up corresponding media products, right?

You can develop them either towards classical retail trade business, answering questions on uplifts and so on, or you come up actually spending your R and D in offering first party measurement across the full media channel.

So you start to earn money outside your own media channels.

And by the way, it's a very important move here because you can help every advertiser answering the most critical questions.

So what is the true effectiveness of my ATVCTV spot?

What is the true effectiveness of an ad in the open web?

So even in search and in social, you'll be able actually to answer those questions to 100% deterministically.

So you can repeat this with discrete numbers because actually you target the group, you run an A B test and then actually you can measure the true effectiveness.

And this is also what will changed the game For a lot of brick and mortar players which were called offline stores in the past, online offline.

None of those big players anymore is in the brick and mortar business offline because you have loyalty apps with a penetration of about 50, 60, 70%, 80% of your sales and those customers are digitally addressable.

And this is actually also flipping the game now for the well established players in the e commerce business.

They are no doubt 10 to 15 years ahead on average, roughly.

And have also provided a lot of valuable market adoption.

No doubt.

But nowadays actually also there we see a lot of opportunities for us because they're running ROAS definitions, nominal ROAS definitions on adjacent roas, which actually is a highly inflated KPI.

If you measure against those kind of adjacent rows, a true incrementality, which is the trend right now, you will see that this will actually fall apart compared to that's true against a single item.

Rower.

Yes.

Or in other words, see it is like this that there's a wonderful chance.

I mean their margin is our opportunity.

Once someone.

Right.

As someone once said, famously said.

Exactly.

And actually that matters to the whole market.

So there's a wonderful chance applies to everybody.

Yeah.

At a time where 80 to 90% of the retail business is still brick and mortar and by far not offline anymore.

Right.

Well.

And Robert, I want to dive a little bit deeper into what those opportunities are then like if with all of the background that you just gave us inflated roas, being in, you know, one of the opportunity areas for retailers and brands, explain a little bit about what your, what your guidance would be on what to focus focus on.

If I'm a retailer right now when.

It comes to retail media, first of all, from the strategic positioning, you have to take the decision of whether you serve retail or media and on how you do that, I mean there's no matter, it doesn't matter actually of whether you decide to do this out of one hand or start to separate it from your point of view as a retailer.

But it makes a significant difference to the market.

Giving you an example, if you start actually to bundle those kind of offers which like you're a supplier and you tell the supplier now you're an endemic advertiser and he is actually offer what we require from you as a listing condition.

These are the trade marketing funds we expect and this is a media money.

And then I can tell you this actually has a lot of significant disadvantages.

Although you might actually be in the position to push very hard is actually first of all of what those players call bundling is truly coupling, in fact.

And then you might take the risk of being sued by the FTC or by 17 states.

Wow, that's happening though.

That's what we're hearing from all these brands is that they are being told, look, you get this end cap in our store, but you also need to spend X number of dollars on our retail media platform.

Yeah, so, and on the other hand, if you start to separate those kind of business lines, and again, you need to facilitate the digitalization of the trade marketing funds, no questions about that.

But you need to focus and enter the media station.

Now come back to your question five steps on how to enter the media business.

First of all, comply to standards because standards matter.

So in the states, you have the mrc, you have the iab, follow those standards so that your media portfolio can be instantly accepted by the media market.

Because there are two main forces actually you need to take into consideration for your market entry.

And this is the learning curve of the advertisers and the trust they need to gain with your portfolio.

Then secondly, start setting up corresponding media offers and start to compare them against existing media offers.

Like for example, digital out of home in front of a store is truly by far more convincing for endemic advertisers than a digital order form at a subway station.

Right, because in front of the store you're just two minutes away from your purchasing decision, whereas at the subway you don't even know whether your customers are all around there.

Third, you can lift the bar.

You can literally bring your own media business on a complete different level because you can start as a retailer, especially brick and mortar, to come up with metrics which haven't been in the market ever before.

Instead of CPM or CPC where you buy eyeballs or clicks, you can internalize the advertiser risk by offering cost per action.

So only customers who saw the ad and truly converted are actually the ones that you have to pay for and not for the lost eyeballs.

And the retailer can do that because it does it already on a 247 basis.

They already predict their good supply for the corresponding promotions on a daily weekly basis.

Why?

Because if you don't do that, you either have overstock positions or out of shelf, which both actually you have to, of course, to avoid.

That's the third step so you can outperform existing media players.

Fourth, you don't actually need to fear any kind of comparison against E commerce pure players because they run on adjacent roas.

If that's the case, then any kind of incremental measurement will give you a strategic advantage.

Why ask yourself when you actually, when you open up an E commerce app and you see an ad, you can decide straight away.

You can decide in 5 minutes, 15 minutes, 1 hour, next day.

Right.

And this is actually factored in in this ROAS calculation.

But if you have on the other hand, the comparison to a loyalty app, you open a loyalty app in the store.

So and you see the ad, you have to decide now because in five minutes you have the cashier, in 15 minutes you're in your car, in one hour you're at home and the next day, most probably you forgot.

So in terms of stickiness and relevance for a media advertiser, this has a really high, high contribution to their main considerations about truly being at the point when the purchasing decision is taken.

And this is qualitative explanation which you can also measure in a comparison between a single article raws versus an adjacent and the fifth one and the most important one, those kind of incremental analysis, A B you can run across the full funnel of digital channels which are digitally addressable.

Why?

Actually you can do an A B test there as well.

You want to know for the upcoming launch or for any kind of samples you might have of which kind of customers you will attract or the different way of which kind of media you need to consider for the corresponding marketing media mix.

You run this kind of a B test, incremental test together with your retail partner and you as a brand will figure out very swiftly on what the optimal mix will be about.

Right, Right.

Wow.

We've got a true expert here and this is fantastic.

All right, so the next question we have for you then, Robert, is how do you see retail media evolving in 2025 and do you think it will evolve the same in the States as it will in Europe as well, or do you think there'll be variances from the distance?

I would say the States are always a couple of years in advance, but they are even of course also in the retail media business.

Although actually it started as far as I've been told, or I looked up actually with Alibaba in 2011.

But it does make a difference.

But the interesting part is that in certain areas, when it's about, for example, digital out of home, I think the States can actually learn a lot about, for example, the business in uk, where they are already quite advanced in setting this up.

And the good thing about the NRF and the community is that we have this instant and direct exchange all around the globe.

So we are by far quicker than we have ever been before in order actually to share best practice and those kind of trends.

So what I actually expect for the market, this will be the year, not only another critical year for the the retail media industry to mature.

We'll see it in a lot of different areas.

Whether it's actually now entering the media business for most of the retail players, whether it's about on how to deal with media content in order to increase the stickiness of your loyal customers.

I mean we see this one from a couple of big players here in the States investing in media content.

And I think this is, this is of a very, very high importance.

Not only actually from a competitor point of view, it's about the potential you have.

Because when you have the chance as an advertiser to book an ad to your audience and measure actually the true sell through performance and the true conversion, even offering those kind of products by one or two clicks is.

Yeah.

Out of actually the running live broadcasting of a football game or whatsoever.

This is truly very convincing for the advertising industry.

And compare this against any other media player not having the chance to integrate media content, advertising and commerce.

And that's a swiftly way.

It's actually I think decisive, looking forward.

Wow, this is so impressive, Robert.

I mean it's really opening my eyes to I think how, how very different you need to set up your teams, how very differently you need to set up your businesses as a retailer right now.

Because you are not just taking people from your media buying teams as a retailer and making them like having them create their retail media business.

You really need to bring people in from the media industry.

Whole new business.

Yeah.

To really start to send this up the correct way based on your very extensive knowledge.

Robert, I'm curious, where do you see the Schwartz group going in 2025?

What are your priorities as you start to really define success for the retail media teams at the Schwartz Group?

Yeah, actually we need to fulfill the expectations of the media players and the advertisers out there and which might.

Yeah, but what actually might sound very simple.

It's actually pretty demanding because you need capabilities and know how you usually don't have at hand as a retailer.

For the retail part, trade marketing, this actually will evolve and it's substantial that this evolves because this is part of our existing retail business.

No doubt.

But for the media part, we'll be for sure in terms of expectations be more confronted than ever before in serving and acting as a media partner.

The most important question will be on how fast the market can adopt to those kind of changes because, see, I don't want to be asked in 10 years of how on earth you could actually gave up on this tremendous opportunity, considering the fact that more than in Germany, more than 94% of the food business is still brick and mortar.

Just taking Germany as an example, we operate in Europe, so there is this digital reach in terms of data technologies.

We are there.

Right.

And the most important aspect is you have to take responsibility and of course, in a very trustful way, treat and work together with your customers, your retail customers, because actually they are the ones relying on you that actually you use their data for their advantage.

Right.

And this is a framing, but I don't want to be asked on how we could give away on such a very good starting position entering this race.

But of course there's a lot of work ahead of us.

Right?

Right.

Just kind of mile one of the marathon, so to speak, in a lot of ways.

And keeping the constituents top of mind is always a good way to go about business.

So.

Well, Robert, thank you so much for your time today.

It was an absolute pleasure getting to pick your brain on this topic.

I know Ann and I both thoroughly enjoyed it.

We'll be here all podcast studio, booth 4938.

Stop on by, come on in, say hello.

And until next time, Anne, be careful out there.