In the second masterclass of the What’s In Store for Retail Media Networks event in London, Craig Macdonald, Partner at McKinsey & Company, offered a broad and enlightening look at the fast-evolving European retail media landscape — what’s working, what’s not, and what must change for networks to survive the next phase of growth.

Macdonald’s core message was clear: demand for commerce media is high, but supply and its execution  are not where it needs to be in order to make the most of the opportunity. 

The Good News: Demand is There, and Retailers Are Innovating

Macdonald opened on an optimistic note, calling out sponsored listings as an established, high-performing digital product that’s already delivering value for both retailers and brands. He also praised European leadership in measurement standardization (driven largely by the IAB) which is creating much-needed alignment between agencies, brands and retailers.

He noted that Europe, particularly the UK and Northern Europe, is ahead of other regions in building solid loyalty infrastructure and advancing in-store digital maturity. These foundational elements are now fueling investment in available in-store networks that are more targeted, measurable and media-ready.

In fact, Macdonald shared examples where retailers are commanding CPM rates of £10–12 for strategically positioned digital signage, outperforming standard digital out-of-home media rates. Structured as media inventory rather than trade placements, these screen networks are emerging as premium, high-value properties.

But There’s a Catch: Fragmentation, Limited Inventory and Tough Trade-Offs

While opportunity abounds, Macdonald didn’t shy away from the sector’s current challenges. One standout issue: digital inventory is constrained, especially in Southern and Eastern Europe, where e-commerce penetration remains low.

Compounding this is the issue of fragmentation. Outside of Amazon, few retail media networks in Europe command meaningful scale. As Macdonald pointed out, “There can’t be 40 retail media networks in pet food”— a nod to the growing need for consolidation.

For brands seeking regional or pan-European campaigns, the long tail of small players creates inefficiencies. Administrative complexity, inconsistent offerings and measurement friction all drive advertisers to prioritize larger, more unified networks.

Retail Media is Still Seen as Performance, Not Brand Media

Despite efforts to reposition retail media as a brand-building tool, Macdonald noted that many agencies and brands still view it primarily as a performance channel.

While in-store media is uniquely positioned to influence both upper and lower funnel objectives, most retailers haven’t yet articulated or packaged their offerings in a way that reflects that dual value. Macdonald stressed that this is where in-store digital networks, when sold with robust targeting and measurement, can act as a catalyst for repositioning retail media as a true brand medium.

Governance, Sales and Simplicity: The Critical Building Blocks

A recurring theme was the importance of getting the basics right. According to Macdonald, many retail media initiatives stall because they fail to establish proper governance. Simply rebranding trade promotions as media is not enough. To unlock incremental revenue, retailers must create new media products, go after brand media budgets and build dedicated sales teams with the skillsets to sell media — not just space.

Retailers also need to simplify. Over-complicated offerings with too many formats or bespoke processes only serve to slow things down. “Media loves scale,” said Macdonald. Standardized, scalable products aligned to industry expectations are key to attracting spend.

Looking Ahead: Four Forces Shaping the Future

To close, Macdonald outlined four trends that will define the next 3–5 years of retail media:

1. Consolidation – With too many players in too many categories, expect mergers, acquisitions and partnerships to create more scale and efficiency. 
2. Expansion to Video – As digital and in-store inventory caps out, high-value video formats — both online and offline — will offer new revenue streams. 
3. New Entrants – Telecoms and travel companies are now entering the commerce media space, creating new competition for non-endemic spend. 
4. AI at the Margins – While generative and agentic AI are buzzworthy, Macdonald predicts a muted impact outside of creative optimization and platform-level efficiencies. 

Final Thought: Change Management Will Make or Break Success

The final audience question, on how to handle joint business plans (JBPs) that are already heavily in-store-focused, brought home the scale of transformation required. Macdonald stressed that evolving retail media networks is as much about change management as it is about technology or strategy.

True success, he concluded, will come when media and trade investment are unified into one integrated offering — backed by better pricing, better reporting and better alignment between commercial and media teams.

Whether it is called retail or commerce media – the opportunities presented by the marketing channel represent a true business transformation.

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