At a time when retail sales growth is barely nudging above a flat line, retailers are scrambling to find ways to diversify their revenue streams. There are plenty of options. But if you want to know what works, there are worse places to start than the example of the biggest retailer in the country, Walmart.

Since 2021, Walmart has run its own advertising network, Walmart Connect. Like all ad networks, Walmart Connect is a platform that links advertisers with advertising opportunities, carefully curated and targeted using data.

But while a traditional ad network sits as a middleman between businesses and media selling advertising space, Walmart Connect is a little different. Much of the advertising space it sells is Walmart’s own real estate, both digital and in stores. And the data it uses to target advertising effectively is its own customer data.

This is model of advertising known as retail media, or running a retail media network, to give it its full title. Walmart didn’t invent the idea. Amazon pioneered retail media by building a hugely lucrative advertising empire across its global online commerce storefronts. But while Amazon’s retail media network is a purely digital play, Walmart is demonstrating the potential of retail media networks to make money in store, too.

Walmart’s advertising network made $4.4bn in revenue in 2024, around 10% of its turnover from retail sales. But the numbers that really make you sit up and take notice are the fact that this represented a 27% increase year-on-year. Retail media is also credited with being a major driver of Walmart achieving healthy growth in operating income in recent years. At a time when retail margins are being ruthlessly squeezed by high costs, the low input costs and high margins offered by retail media are very attractive.

First steps into retail media

So what kind of opportunity does retail media offer your average retail SME? There is a clear sense that this is an enterprise play at present. Amazon and Walmart currently command 84% of retail media spend in the US. They have the scale and the resources to make their ad networks attractive and profitable. But with revenues from retail media expected to approach $100bn by 2028, even a 16% market opportunity is worth paying attention to. And there’s potential to eat into Amazon and Walmart’s dominance by addressing niches they don’t cover.

In terms of getting started with retail media, the first step is thinking about how to monetize your customer data. What data do you hold in your POS, ecommerce platform, CRM, loyalty program etc? How useful is it for segmenting, targeting and profiling? Start by analysing how you use your data in your own marketing activities. What you are aiming for is ready-made segments that you can sell to media buyers with clear evidence that they are well targeted and effective. If you’re not seeing high conversion rates from data-led targeting yourself, you don’t have a product you can go to market with.

Next, you need to think about your advertising ‘inventory’, or where you can show ads. Digital advertising is still the biggest sub-sector of retail media, although in-store is growing as digital screens become more and more of a feature in retail premises. The best advice is to start with existing assets first, so display ads and sponsored product slots on your website, and kiosks and customer-facing POS screens in-store. If this is successful, you can start to think about investing in dedicated screens, including on-shelf displays so you can sell sponsored product recommendations in store, too.

Finally, in terms of who will be buying your ad space, start with your own most trusted suppliers. Build on existing merchandising and promotional relationships as a means of getting to grips with how retail media works. It probably won’t be profitable at first. But the aim is to build your capabilities to a point where you can take your network to the wider market. Longer term, you can even aspire to function as a standalone advertising network and connect with other publishers (including other retailers) to run ads ‘off-site’, i.e. in spaces other than your own.