Reimagining customer value: Navigating retail profitability and digital disruption

Beyond the basket: The rise of audience-based value

The customer journey as we once knew it has completely evolved and the marketing funnel has collapsed; individuals are now becoming aware and converting at the same stage of the customer journey.

In a world where scrollers and influencers have replaced traditional shoppers and sellers, retail economics has also taken on a new identity. Sellers must accept the hard reality that retail today requires more than just sales. Even as social media platforms take over product sales and megaretailers bid to buy media platforms, retailers’ operating costs rise and profit margins fall. Before retailers succumb to the unprofitable position of being third-party fulfilment centres – handling other companies’ sales and returns – an evolution in business model is needed.

Tapping into retail media as a new source of business can unlock dual revenue potential, enabling a model that blends transaction-based revenue and media-based revenue. It requires that retailers recalibrate their traditional perspectives related to customers and products. To secure loyalty and future revenue, it’s time to start seeing customers as monetisable audiences, and products as content.

This is a transformational period for retailers who evolve their model and think ahead. We’re fast approaching a world where retailers can profit from customers who don’t fill carts but instead power campaigns. Even if they don’t buy, they help brands sell,which is highly lucrative for those retailers who are ahead of the curve. In other words, it’s time for retailers to starting thinking like media company executives.

From niche to necessity, the rise of retail media didn’t happen by accident – it was driven by seismic changes in the digital landscape. The phasing out of third-party cookies and increased consumer privacy demands have made first-party data more valuablethan ever. At the same time, consumer behaviour has shifted dramatically, with shoppers expecting more personalised, relevant experiences across digital touchpoints – further increasing the value of owned data. And retailers now face stiffer competitionfrom global platforms and direct-to-consumer brands. In this environment, retailers’ ownership of rich, first-party customer data has turned into a competitive advantage, and retail media networks are the perfect way to monetise it. That’s why we’reseeing an explosion of retail media investments across Europe and beyond.

We’re now witnessing a race to own the future of customer value, as social media platforms and retailers converge – and compete – for control of the full customer journey. Social giants are rapidly advancing transactional capabilities, and retailers must accelerate the development of retail media networks to keep pace. The window to act is narrowing. Those who hesitate risk being outpaced by more agile, digitally native competitors who are redefining customer lifetime value and capturing a disproportionate share of future growth.

Retail profitability under pressure

Margins in traditional retail have been under pressure for more than a decade. Direct-to-consumer models have seen consistent decline, driven by rising labour costs, fulfilment and returns, and intensified distribution expenses. Even as digital sales grow, profitability remains razor thin—typically between -5% and 5%, compared with healthier in-store margins of 3% to 7%.

At the same time, consumer behaviour is shifting. Shoppers are leaning toward private labels, discount formats, and new digital-first experiences. By 2028, online platforms are expected to capture more than 21% of global retail sales. The old profit model no longer works—retailers must adapt or risk falling behind.

Social platforms as storefronts

In Europe, growth of social commerce is outpacing the rest of the world at nearly 20% year-on-year, compared with 16% in the U.S. Platforms like TikTok, Instagram, and WeChat are no longer just places for discovery—they are becoming marketplaces.

The numbers are telling: from $9.5 billion in 2020, social commerce revenue is forecast to reach $48 billion by 2028. Among Gen Z shoppers in Europe, nearly 80% have already made purchases directly within social platforms.

This is more than competition—it’s a fundamental rewriting of the retail playbook. Social platforms own consumer attention, and now they are embedding transactions to capture direct sales at scale.

Retail media: From experiment to essential

Retailers are not without leverage. They own rich, first-party data through loyalty programmes, apps, websites, and in-store interactions—data social platforms cannot match in quality or depth. Retail media turns this into a strategic advantage. Once a test-and-learn initiative, retail media is now a high-margin profit engine.

In Europe, adoption is still early, but the market is scaling fast. Retail media spend is projected to double to €31.3 billion by 2028, driven by budget shifts away from TV and programmatic advertising. For retailers, this is no longer a side business—it’s a structural shift in how growth, profitability, and loyalty are created.

Rethinking Customer Lifetime Value

Perhaps the biggest mindset change is how retailers define value itself. Traditionally, Customer Lifetime Value (CLV) was measured in purchases alone. But in today’s world, that’s no longer enough.

Retailers must evolve how they define and apply Customer Lifetime Value (CLV). It’s a common metric, but one that some retailers struggle to define, either because data isn’t available or teams have different definitions across the business, which impacts digital investments.

But CLV can no longer be treated as a static, back-office calculation. It must be reimagined as a dynamic, strategic metric and one that reflects the full spectrum of customer value, from purchases to influence, engagement and media impact. This is not just anupdate; it’s a new way of thinking about customer relationships.

Customers are not just buyers; they are audiences. Every click, view, and share has value. Products are not only inventory; they are dynamic content that can spark desire, drive engagement, and amplify campaigns.

By incorporating audience-based value into CLV—monetising attention, engagement, and influence—retailers can boost total customer value by 15% to 25% at much higher margins.

In other words, retailers can now profit from customers who never fill a cart but power campaigns. Even if they don’t buy, they help brands sell. This shift toward audience-based value and monetising attention is more than just a data or revenue play. It marks a fundamental redefinition of what it means to build customer relationships in the digital age. It goes beyond calculating lifetime value through transactions, and recognises every moment of engagement as a signal of potential.

The race for consumer value

Perhaps the biggest mindset change is how retailers define value itself. Traditionally, Customer Lifetime Value (CLV) was measured in purchases alone. But in today’s world, that’s no longer enough.

Retailers must evolve how they define and apply Customer Lifetime Value (CLV). It’s a common metric, but one that some retailers struggle to define, either because data isn’t available or teams have different definitions across the business, which impacts digital investments.

But CLV can no longer be treated as a static, back-office calculation. It must be reimagined as a dynamic, strategic metric and one that reflects the full spectrum of customer value, from purchases to influence, engagement and media impact. This is not just anupdate; it’s a new way of thinking about customer relationships.

Customers are not just buyers; they are audiences. Every click, view, and share has value. Products are not only inventory; they are dynamic content that can spark desire, drive engagement, and amplify campaigns.

By incorporating audience-based value into CLV—monetising attention, engagement, and influence—retailers can boost total customer value by 15% to 25% at much higher margins.

In other words, retailers can now profit from customers who never fill a cart but power campaigns. Even if they don’t buy, they help brands sell. This shift toward audience-based value and monetising attention is more than just a data or revenue play. It marks a fundamental redefinition of what it means to build customer relationships in the digital age. It goes beyond calculating lifetime value through transactions, and recognises every moment of engagement as a signal of potential.

The funnel is gone. The journey is collapsed. The race is on.