Physical stores represent retail media's largest untapped growth opportunity, but the industry's ecommerce-first infrastructure is preventing that potential from being realized.

"Retail media in the US was never built for physical stores," said our analyst Sarah Marzano at EMARKETER's Commerce Media Trends Summit. "The system we built was designed around ecommerce native signals, ecommerce native formats, and ecommerce native measurement."

While we forecast US retail media ad spending will reach nearly $100 billion by 2029, that growth masks a fundamental structural problem: The channel was architected for digital transactions, and physical retail operates differently.

Amazon's dominance reveals the ecommerce bias

Retail media's concentration around Amazon illustrates how the current system advantages digital environments over physical ones. Marzano said Amazon captures roughly 80% of all retail media ad spending, a share that significantly outweighs its portion of overall retail activity.

"When one player offers access to the majority of US households and directly controls such a large share of digital transactions, ad spend, consolidation becomes rational," she said. "And that tendency is reinforced by the friction advertisers experience when scaling across multiple retail media networks, which often means managing separate platforms, inconsistent reporting and measurement approaches that are not directly comparable."

Marzano said when success is measured in digital transactions, it naturally advantages ecommerce environments while making physical retail harder to measure, compare, and scale within that same framework.

"When you place Amazon's dominant share of retail media ad spending, alongside its modest share of total retail sales, it becomes clear that the concentration in ad spending reflects how our system was designed, not necessarily where the most retail influence occurs," she said.

Advertiser goals are evolving beyond the infrastructure

Retail media initially scaled because it excelled at driving lower funnel outcomes through sponsored search and deterministic digital conversion. But Marzano said buyer expectations are broadening in ways that the current infrastructure struggles to support.

When asked their primary reason for investing in retail media, ad buyers ranked increasing brand awareness ahead of driving sales, according to a March 2025 survey from Koddi.

"Advertisers increasingly see retailer data as a full funnel asset, not just a performance lever," she said. "So retail media is no longer viewed as simply a lower funnel channel, and advertisers are planning accordingly. When we visualize the entire shopping journey, it becomes clear that physical stores touch every stage of the funnel from awareness and consideration through to conversion."

She said physical stores are the number one place where consumers say they discovered products they ultimately purchased.

Despite the massive potential, in-store retail media spending is set to remain a tiny fraction of total retail media ad spend. The disconnect isn't about demand.

"Participation is real, and yet in-store spending remains limited overall, and this creates a really meaningful contrast between adoption and investment," said Marzano. "If participation is broad, but spending remains limited, the next question is how that spend is distributed. When we look at in-store allocations, we see clear concentration even among buyers who are investing in in-store retail media, most are limiting that spend to just one or two networks."

Buyers aren't simply asking for more in-store presence. They're asking for in-store performance to integrate cleanly into the frameworks they already use to evaluate retail media. Until in-store performance can be evaluated in ways that feel consistent with broader retail media KPIs, buyers will continue to scale spend cautiously.

"Retail media did not fail stores. It simply wasn't built for them," said Marzano. "The next chapter of growth depends on whether the industry is willing to redesign retail media to reflect where most commerce actually happens."

Watch the full session.

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