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Retail Media Network Business Case
In order to provide a base case for developing a business case for retail media networks, we started with a hypothetical retailer of 500 stores, with annual revenue of $2 billion. Assumptions used in the business case, for example, the number of stores, revenue, cost of goods sold as a percent of revenue, are variables that you can change to reflect your circumstances. We based our assumptions and test case on a mid-size retailer with large-box specialty stores. Store size averages 30,000 square feet, and we assumed 5 screens per store, operating a single channel (i.e., no segmentation or day-parting) and a single loop of 20 minutes – the assumed average dwell time of a customer. We assumed an average transaction value of $11.57, and that chain-wide weekly foot traffic averaged approximately 450,000 people. All of these are variables in the Excel spreadsheet that accompanies this report, and are available for you to change. To use the spreadsheet, begin with the “Start Here” tab, which describes each of the tabs in the spreadsheet, and how to use them. The spreadsheet is intended as a tool to facilitate discussion about the potential business case for a retail media network. It in no way replaces a retailer’s own due diligence about their specific circumstances. NOTE: Users of the spreadsheet reported errors in some of the calculations within the spreadsheet. These errors were corrected on 3/20/08. The corrections did not impact top-line results, but did have a material impact on bottom-line results, reducing the impact in the base case from 5% in the first year to 1.5%, and from 10% in the second year to 3.6%. If you find additional errors, please contact the author of the report, Nikki Baird, at nbaird@rsrresearch.com. From Nikki: "This isn't about being right, this is about getting good information into the industry domain. Please let us know if you find something questionable."
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