Brands that keep loyalty programmes and retail media in separate silos are leaving value on the table. While integrating the two can be a complex undertaking, failing to address this is a strategic oversight, says Mrinalini Chowdhary, Director of Strategy & Insights for EMEA at Epsilon.

If brands and retailers are serious about growth, now is the time to think bigger – more connected, more strategic. When loyalty and retail media join forces, brands don’t just see incremental improvements, they can unlock exponential performance.

The rise of retail media – and loyalty’s role

Retail media has gone from buzzword to a boardroom priority over the last few years. In the U.S., retail media ad spend is set to exceed $106billion by 2027 according to Insider Intelligence, while in the UK, investment is set to hit £1billion by 2025, excluding Amazon, according to the IAB.

As the IAB forecast states, this buoyant market is down to “advertisers looking to leverage the vast wealth of first-party data [that] retailers can offer.” Retailers’ own data is loyalty gold.  Every time a shopper scans their loyalty card or checks out online, they are revealing intent.

When Tesco Clubcard launched 30 years ago, it reinvented loyalty and pioneered the loyalty programmes we see today. It continues to set the agenda, with Tesco’s Media & Insight arm using Clubcard data to deliver ads across digital, in-store and connected TV (CTV).

Sainsbury’s Nectar360 allows brands to activate loyalty-powered campaigns across owned channels, while Boots Media Group leverages its Advantage Card insights to personalise media with precision.

But here’s the real power advantage: the secret behind every great retail media campaign is loyalty data, the engine of modern advertising.

Precision marketing starts with loyalty

With consumers looking for more from brands, loyalty programmes today are less about points and rewards and more about connecting on an emotional level.  Loyalty as an experience, not just a programme.  After all, Aldi doesn’t have a loyalty programme but has done a good job in building brand values and ensuring customers see its perceived value.

The challenge for brands and retailers is that loyalty programmes struggle with ongoing engagement.  A recent study by Epsilon in the U.S. showed that 70% of consumers say they sign up for loyalty programmes because they value the discounts, perks and rewards on offer. The problem is that shoppers join, get their welcome perk and then drift away.

“Brands who truly understand their customers and deliver authentic engaging experiences that align both brand and consumer values can create a shared sense of purpose. Loyalty programmes need constant care and attention – it’s is not a destination, but a journey that evolves along with consumer expectations.”

Retail media helps solve this, helping to unlock customer behaviour, preferences and purchase history.  ASDA and Morrisons, for example, offer brands access to data-led advertising solutions across their digital and in-store ecosystems. These retailers are turning transactions into engagement.

Imagine three different scenarios. A shopper looking for skincare products sees a banner with Gold Tier beauty perks; a customer with expiring points gets a tailored check-out ad; and frequent buyer is served a personalised homepage spotlight featuring their most-loved products and a surprise bonus offer just for them.

That is not just advertising; it’s behavioural science at its best.  If you look at Amazon Prime, this is a masterclass in blending loyalty, content and media into a seamless flywheel of spend and customer retention.

Building the closed-loop flywheel

When loyalty and retail media unite, this creates a closed-loop system. Brands and retailers can segment audiences using loyalty data, allowing them to activate campaigns across retail media channels, track transactions tied to media exposure, deliver personalised loyalty content and optimise it using real-time performance data. This isn’t a campaign, it’s a self-sustaining customer journey.

There’s no doubt loyalty and retail media is a perfect match. But only if retailers break down the silos, invest in connected platforms and shift their mindset from isolated tactics to integrated ecosystems.  When you connect identity, media and loyalty, you build relationships at scale – and ultimately, that’s what retailers and their suppliers want.