This article was originally published on WARC.

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The growth in online shopping and e-commerce, triggered by COVID, is slowing, but the anticipated demise of in-store brick-and-mortar retail has not occurred. The sector is looking healthy. During last year’s Boxing Day sales, Australians spent an estimated $1.3 billion – an increase of 2% from the previous year – with major shopping centres experiencing increased foot traffic. This wasn’t a one-off – 2024 Black Friday and Father’s Day sales also saw growth in in-store retail sales.

It can be said that retailers have woken up to what they can offer customers through immersive experiences that online or e-commerce cannot.

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So why does in-store shopping have appeal? Let’s draw on the humanness factors:

• Tactile and sensory engagement. Online shopping cannot directly engage our senses, yet we know that humans enjoy the experience of touch. While virtual experiences come close to the real thing – they are still not quite the same. For example, customers can test makeup shades at a Mecca beauty counter and try sports equipment at Rebel's experiential stores. These are both excellent examples of tactile and sensory engagement.

• Human interaction. Amid rising loneliness, isolation, and the trend of working from home, human interaction is crucial. David Jones acknowledges this need by providing personalised consultations in luxury retail and dedicated service desks in its department stores.

• Social connection and entertainment. Shopping has become a leisure activity that creates a sense of connection with wider groups, such as families with young children. Malls and shopping centres recreate what neighbourhoods used to be, modelling behaviour and providing group entertainment. For example, Westfield Knox’s Dreamskape integrates an entertainment centre into the shopping environment.

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TRA survey data shows that retail is the category people most associate with feelings of connection. While this creates opportunities for the retail sector, encouraging innovation in immersive experiences, it also poses challenges for growth in the media channels within physical retail environments to engage those customers at the point of purchase. This includes screens, in-store radio, interactive kiosks, and other media formats designed to deliver advertisements, promotions, and branded content.

Brands and retailers can reap clear and significant benefits from leveraging physical retail media environments. Perhaps the most compelling argument is the proximity to the moment of purchase. Shoppers are a captive audience and can actively make purchase choices in-store while queuing to make payments. Yet the potential of retail media is impacted by other factors in the shopping environment.

Digital screens, audio messages, shelf displays, and shopping cart advertisements are all relatively new features that contribute to the experience. In some ways, we can draw parallels between these features and old-style markets. Markets create a shared, party-like atmosphere where sensory overload is part of the experience. Think vendors calling out, announcements made over loudspeakers, camaraderie between stall holders, and the smell of food pervading the air.

However, shoppers today typically tell us they are looking for calm and efficiency in their shopping experiences. In a sensory-overloaded world where busyness and time pressures are the norm, it’s not surprising that people would say that.

Balance experience with overload

So, how can shopping environments balance this sensory overload? Are physical retail media environments pushing the limits of what people will tolerate or perhaps people are just good at zoning out? Shoppers have told us that, particularly when the media interferes with speed and efficiency, their focus is on filtering out the ‘noise’ so they can get in and out as quickly as possible.

Visual overload, sensory clutter, audio interruption and process delay all make shoppers feel they don’t have control – and nothing makes people feel more uncomfortable than lack of control.

Digital screens at checkouts, for example, are called out by some shoppers as slowing down the process. Audio media can be distracting, causing people to lose their focus and forget items they need, and visual overload can make some people anxious – especially in confined spaces. For some neurodiverse shoppers, these experiences are exasperated.

So, where does this leave the retailer? Let’s return to the outdoor market experience. Sure, it’s also ‘noisy’, arguably more so, but it’s also fun – it’s a destination that delivers an immersive experience. Shoppers feel in control of their experience and entertainment is built in.

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There’s a lot to be learned from a market experience that can inspire in physical retail media environments:

• Use humour and playfulness. Market traders (individuals who sell goods directly to customers at physical market locations) are entertainers, and positive psychology demonstrates the value of making people happy. Shopping can be a chore, so lighten the load and the mood by making people smile.

• Complement, not replacing, staff. Market traders forge a sense of genuine connection. We know people connect on the basis of shared interest, so having experts and specialists creates a connection. Physical retail media environments should assist rather than replace human interactions. Interactive screens, for example, that provide additional product information can enhance staff focus on deepening customer engagement.

• Personalisation without sensory overload. Physical retail media environments create opportunities to benefit from customer data and proximity to purchase, but this has to be made easy and reciprocal. Think, ‘What’s in it for the customer?’ For example, Coles’ AI-powered trolleys help shoppers find deals and locate products.

• Put the shopper in control. Empower shoppers by highlighting technologies that make finding products or deals easier. For example, augmented reality apps that guide shoppers to specific aisles or promotions.

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Physical retail media brought to life

Adore Beauty, a successful Australian online retail media platform, has just opened its first brick-and-mortar store. Beauty Director and CEO Sacha Laing said, "The (Melbourne’s Westfield) Southland store is the first step in a new and exciting chapter for Adore Beauty. This chapter will see us bring our online experience, which our customers know and love, into physical settings where they can explore, learn, and play with beauty, with the guidance of our in-store experts."

Adore Beauty is known for doing retail media well, but how does this translate into an in-store environment? A beautiful interior with an air of calm about it, standing in stark comparison to other stores that don’t have retail media in their DNA. The brand aspires to “provide customers with personalised leading edge digital skin analysis, a carefully curated range of 300+ beauty brands and a best in class in-store beauty service experience”. With a unique approach to the in-store experience, the success of this store will be one to watch as a flagship of how brands can do retail media well.

Australian supermarkets have been leading the change in recent adopters of physical retail media environments. Aldi Australia has begun exploring digital and in-store advertising. Then there’s Woolworths’ retail media network, Cartology, which provides advertisers with access to its digital ecosystem, including in-store digital screens. Additionally, non-food retailers, such as The Chemist Warehouse, offer sponsored product placements and in-store digital signage. The impact of these advancements on shopper experience and retail success will be telling.

The advantages of brick-and-mortar are even more prevalent given our increased yearning for humanness and connection. Physical retail media is also clear as being here to stay. For those in the industry, there is much to observe to determine where retail media is done right and where it is not.

Ultimately, understanding the psychology of their customers will ensure more pleasing experiences. You have to shout out to market traders who intuitively know how to do this – the large-scale sophisticated retailers could learn a lot from them.

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