As consumers research and purchase products across multiple channels, physical stores are increasingly becoming media environments in their own right. In that context, artificial intelligence is set to play a central role in how brands connect with shoppers in the year ahead, according to Lachlan Brahe, commercial director at Epsilon Australia.

Retail media, once largely confined to onsite placements, is now influencing consumers across the entire shopping journey, including in-store at the point of purchase. Brahe says much of the current discussion around AI and retail focuses on agentic shopping, but that overlooks the more immediate commercial priorities facing retailers and brands.

“As retailers and brands continue to feel the pressure and scrutiny to justify media and marketing investment, it’s the tools that unify, measure and optimise campaign outcomes that will be rapidly adopted. These tools are AI-driven,” Brahe says.

He expects generative AI to be increasingly adopted for creative deployment and merchandising, particularly where it delivers operational efficiency and measurable outcomes.

“Dynamic product imagery, automated video content and personalised landing pages and user experiences will enable retailers to produce thousands of relevant variants, leading to cost savings and time savings, as well as commercial and operational advantages.”

While innovation in-store continues to accelerate, Brahe cautions against viewing in-store media purely through a sales lens.

“When you consider how stores are evolving to capture attention, interest, create an ambience, and make shopping fun, it does seem remiss to equate in-store ad formats purely with sales rather than metrics to support the wider store evolution. In-store advertising is much more than point of sale.”

Technology and measurement drive growth

Brahe argues that technologies capable of increasing media revenue while clearly demonstrating effectiveness will emerge as winners.

“There is in-store technology for convenience, like smart trolleys, digital shelf edges, and there’s in-store technology that supports more ‘ambient’ aspects of the customer experience, such as audio, connected screens, brand activations and product sampling. But until it delivers a measurable impact against its purpose, it’s a novelty.”

He says the most influential innovations will be those that link media exposure to tangible outcomes – which include sales, engagement and behaviour change –  while also connecting online retail media exposure to in-store performance.

Loyalty programs play a critical role in this equation. According to Brahe, they enable retailers to match digital exposure to physical conversion, helping brands understand whether retail media is driving incremental sales.

“This closes the performance loop for brands that have historically questioned whether retail media drives incremental sales, and it allows retailers to price inventory on proven results.”

He advises retailers to prioritise omnichannel measurement before pursuing omnichannel strategies.

“Without a unified view of the customer, every omnichannel plan – or ambition – is guesswork. You can’t identify consumers, and you can’t determine the impact of each channel, either individually or collectively.”

With consumers moving fluidly between physical stores, apps, marketplaces, social platforms and delivery services, Brahe says retailers must shift from channel-based thinking to customer-based planning that connects exposure, interest, intent and action across touchpoints.

Central to this shift is identity resolution technology that enables first-party data to be connected across environments in a privacy-safe way.

“Activation comes next, with a retail media solution that connects online and offline advertising, leveraging both deep audience data and media relationships,” he says. “These platforms should include decisioning engines that use consumer behaviour to choose the right media engagement and creative.”

For Australian retailers, where in-store purchases still account for around 80–85 per cent of transactions, integrating offline data with digital behaviour is essential to building a scalable retail media business.

Brahe also expects rapid uptake of privacy-preserving identity solutions and data collaboration capabilities, which he describes as “foundational for retail media to be able to activate against a retailer’s audience across the open web and CTV”.

Offsite retail media emerges as growth engine

Brahe identifies offsite retail media as the primary growth opportunity for retailers this year. He says success will depend on recognising that audiences cannot be defined through siloed data sets.

“They should invest in developing a more open approach to identity resolution, and build robust, meaningful measurement solutions – all of which enable customer data to be activated across the open web without compromising privacy.”

He adds that offsite media must be productised with the same discipline as onsite offerings, albeit with different objectives.

“Offsite partnerships afford the means to increase creative formats whilst still tying performance to sales,” he says, predicting more partnerships between retailers and traditional media owners to unlock scale across data and inventory.

Brands also have an opportunity to accelerate retail media growth by better aligning trade, merchandising and media functions.

“Connecting commerce and trade teams with brand media and programmatic specialists, using a retailer’s data to inform creative, targeting, reach and optimisation creates a unified approach for full funnel media investment.”

AI, hyper-personalisation and the shopper experience

Brahe expects AI-driven hyper-personalisation to increasingly shape retail operations and consumer experiences, particularly online. However, he cautions that adoption will only scale where AI genuinely reduces friction.

“For consumers, the idea of using agentic search and purchase seems appealing,” he says, while noting that many shopping behaviours remain inherently tactile and experiential.

“AI outputs will only ever be as effective as their inputs. Without solid user recognition, historical shopper data and current intent data, the output will be limited and less relevant than what a retailer can deliver when a shopper interacts with them directly.”

Used well, he believes AI can strengthen retail media models by improving relevance for shoppers while helping brands reach high-intent audiences.

“Bringing the power of LLMs and conversational search to a retail site allows users to search however they want, with the retailer’s data enabling hyper-personalisation,” Brahe says. “This serves both the user’s best interests and the brand’s interests in getting in front of shoppers with the highest intent signals.”