Four Retail Media Challenges Keeping Teams Awake and Fixes

Retail media teams are grappling with four major challenges that are impacting performance and growth. These include data fragmentation, measurement inconsistencies, rising competition, and evolving consumer expectations. As brands invest more in retail media, the pressure to deliver measurable results has intensified. Addressing these issues requires better data integration, standardized metrics, strategic planning, and a customer-centric approach. By tackling these hurdles effectively, teams can optimize campaigns, improve ROI, and stay competitive in an increasingly complex retail media landscape.

Retail media teams today are navigating a complex landscape shaped by discovery challenges, scaling limitations, and the ongoing debate between building or buying solutions. This piece explores four key pain points currently troubling the sector and highlights the innovative strategies emerging to address them.

Retail has historically demonstrated resilience in the face of disruption. Whether it was the rise of e-commerce, mobile shopping, social platforms, or rapid delivery models, each wave once seemed threatening, but most established players managed to evolve. This time, however, the shift feels more profound. What’s causing unease among retail media teams isn’t just the usual concerns around new technologies, channels, measurement, or budget constraints. Instead, there’s a deeper realization that the very foundations of growth are being redefined.

At major industry gatherings in early 2026, such as CES and NRF, leaders have been raising questions that go beyond simply accelerating growth. The conversation is shifting toward survival, how to remain visible, relevant, and profitable in an increasingly AI-driven e-commerce environment. This discussion is expected to continue at Shoptalk in March.

Companies like Mirakl Ads, built with an AI-first approach, have been actively engaging with retailers at these events. By closely observing market dynamics, they are helping businesses adapt to this rapidly evolving landscape.

One major shift comes from the rise of agentic AI, which is reshaping how consumers engage with retail platforms or whether they engage directly at all. With a significant portion of global shoppers now relying on AI tools and large language models for decision-making, demand is increasingly being filtered through intelligent systems.

This evolution threatens the traditional advantage of retail media networks, particularly their reliance on search-driven advertising revenue. However, forward-thinking retailers are reframing this challenge as an opportunity to reinvent how products are discovered and how monetization strategies are structured. As product choices continue to multiply, consumers are seeking clearer guidance. AI-powered assistants are stepping into this role, acting as digital concierges that use conversational interfaces and contextual understanding to guide shoppers seamlessly from browsing to purchase decisions.

At the same time, retailers are strengthening digital experiences within physical stores, blending online discovery with in-store fulfillment. Success in this space depends on designing around real customer behavior, how shoppers move, pause, and interact, while also upgrading measurement frameworks to focus on outcomes like sales lift, incrementality, and brand impact.

Another pressing issue is that, despite rapid growth, many retailers are not fully capitalizing on retail media’s revenue potential. While demand is strong and margins are attractive, monetization often remains limited to a small group of established, first-party brands. Operational complexity further complicates scaling advertiser relationships, often requiring additional resources and creating inefficiencies. To overcome this, leading retailers are building systems that cater to both first- and third-party sellers from the outset.

Marketplace sellers, in particular, are emerging as highly engaged advertisers. Without strong brand recognition, they are more willing to invest in visibility when given access to transparent and effective tools. AI-powered, self-service platforms are helping remove operational bottlenecks, enabling broader participation and turning retail media into a more scalable and sustainable revenue stream.

At the same time, traditional growth models in retail are under strain. Expanding store networks, inventory, and owned assortments once drove success, but these strategies now come with increased financial risk. Rising logistics costs, inventory exposure, and pricing pressures are squeezing margins even as customer expectations continue to climb.

To adapt, retailers are shifting toward ecosystem-based models. Marketplaces and dropshipping allow businesses to expand product offerings without taking on inventory risk, while also creating a built-in base of advertisers. This approach not only reduces financial pressure but also fuels a cycle of growth, as more sellers engage in retail media initiatives. Finally, the long-standing debate between building in-house solutions and buying external platforms is slowing progress for many retail media networks. While internal development offers control, it often leads to delays and diverts attention from core business priorities. Meanwhile, advertiser expectations continue to evolve rapidly.

To stay competitive, leading retailers are embracing flexible, best-of-breed technology stacks that integrate seamlessly from the start. Pre-integrated solutions that connect easily with existing data, identity, and marketplace systems are becoming essential. Equally important are user-friendly tools for campaign management and real-time data insights that enable quick, informed decisions. The retailers gaining momentum in 2026 are not relying on a single solution. Instead, they are rebuilding their ecosystems, across data, media, and marketplaces, to remain visible and trusted in a world where AI is playing an increasingly central role in shaping consumer behavior.

For questions or comments write to contactus@bostonbrandmedia.com

Source: thedrum