Q&A with Tim Arits (InTouch): “Retail media networks need to be smart and data-driven”

PetrolPlaza explores the potential of retail media networks, a trend that is poised to be at the forefront of the digital transformation within the industry. We talked to Tim Arits, CEO of InTouch, to explore the impact of these solutions on the sector, how to shape the in-store experience and what it means for retailers.

InTouch was founded in 2015 by three professionals with extensive backgrounds in data science and machine learning: Tim Arits, CEO of the company, Sameh Abdalla, Chief Technology Officer, and Doychin Doychev, Lead Architect. Collaboratively, they harnessed their specialized knowledge to explore how these technologies can evolve in-store retail to compete with the rise of e-commerce platforms. This resulted in the development of a two-sided media network for both retailers and advertisers The platform enables the precision targeting of content based on data points unique to physical stores, encompassing layout, customer demographics, and real-time weather conditions.

Q. What can you tell us about the state of the convenience retail industry when the company was founded? How did InTouch find its place in this landscape?

A. In 2015 a lot of news articles were talking about the disappearance of physical stores and the transition into e-commerce at that time. High street retail stores were closing, and there was a lot of uncertainty about the role of brick-and-mortar retail. Back then we believed that physical stores had a future – they only had to transform to compete with the online market.

The data-driven nature of e-commerce platforms allows for improvements around efficiency and customer experience. We wanted to build a data-driven solution that would help physical stores compete. Our team came from a heavy data science background and wanted to build the store of the future, so we created a solution that captures data and promotes the right product at the right time. Hyper-targetization that can adapt depending on the store’s data. Now, retailers can promote umbrellas when it’s raining and ice creams when the sun is shining depending on consumer data such as age, gender, loyalty, etc.

Q. How can brick-and-mortar retail stay relevant as online platforms continue to develop and customers lean towards digital experiences?

A. In-store is so important because the majority of transactions are still happening there, most notably for consumer-packaged goods (CPG) brands. Over 90% of transactions are still happening at the store, especially for the convenience and fuel retail industries. There is a high chance of influencing customers due to impulse buying. Retailers often have a lot of information sitting in silos, which means they are not bringing it all together to unlock value for the customer.

If they use the right infrastructure inside the store alongside an impactful approach to data, sales could increase significantly. There is so much data available inside the store – retailers just need to use it in the right context. Retail media may be a buzz word at the moment, but its main goal is bringing value by promoting relevant products at the right time, which in turn builds a better, smarter and more data-driven customer experience.

Q. The prospect of overwhelming shoppers with constant content poses a risk of hurting the customer experience. How can a retailer overcome this challenge?

A. A retail media network’s success depends exclusively on the customer experience, and shoppers reflect that every single day through their purchases. They want to see relevant content at the right time, which creates value. The potential of this approach has been proven over time, with Google being a very good example of this. They started showing content to the right people at the right time for the right search queries, and that’s how they became one of the largest Internet companies globally. Retail media networks need to be able to do this regardless of the product, and once you have that insight you can start building an advertising strategy on top of it.

Q. What new capabilities can be unlocked by implementing retail media networks? How does this shape the dynamics of a chain’s operations?

A. How can retailers produce more content, get ads for all the different products inside the store and decide on the call to action? In order to find the right product at the right time, there is so much data and decision points that it is impossible for humans to decide what is the most effective display for the store. That’s when the AI that we've been developing since 2015 jumps in, to help companies decide and optimize content inside the store. Humans will never be able to make decisions on such a large scale, but these new capabilities will still require to be managed by people. We see that this creates a lot of value for the organization, and where value is created more headcount will be needed as well. In addition, these platforms are also able to compete with Google, Facebook, and other networks as well, because retailers will be able to take some of that advertising money and bring it into the store. I think that change is positive because it opens new opportunities for companies and enables them to grow faster.

Q. What role do CPG brands play in this equation? How can these companies benefit from retail media networks’ impact at the store?

A. Once we build value with the retailer, CPG brands are presented with a network that is already increasing sales. In our case, they can access InTouch ads, which is an ad-buying platform where brands can log in and buy advertisement space on top of the network that the retailer has deployed. It's similar to Google AdWords, companies can log in, set up campaigns, manage them and measure uplift. Insights are then provided to both sides to check their campaigns’ performance, what’s the targeting criteria and how they can make a success out of the platform.

Q. Prominent retailers such as 7-Eleven and Casey’s have made substantial investments to build proprietary platforms and operational growth. How will smaller retailers navigate these new implementations?

A. There's also a lot of value for smaller and independent retail stores. This will take a little bit of time as we see this trend moving into programmatic advertising. At the moment it is all done via packages, for any of the big retailers like 7-Eleven and Circle K, they only need to turn to the brands and have massive packages purchased on top of their networks. This is similar to the early days of Internet advertising. Programmatic advertising works as a bidding ecosystem. It's part of a much wider infrastructure, which will probably be integrated into existing infrastructure such as TradeDesk or DV360 by Google. Although smaller c-store chains are still seen as inadequate by large advertisers, this next step will enable them to take some money out of that pie in the future.

Q. Can we anticipate a widespread roll out of retail media networks throughout physical stores?

A. We are still not there yet. The market is fragmented at the moment and it's starting to get consolidated for online purchases but offline is still further away and quite new. Given the fact that 90% of the transactions are still happening at the store, physical space will still play a key role in the wider infrastructure. But the progression of retail media networks will be first online, then offline, and for retailers the big c-store brands will come first and then those with a smaller footprint.

Interview by Gonzalo Solanot