Costco's Retail Media Strategy Revealed | NRF 2025 Insights with Mark Williamson

Hello, everyone.

This is Omnitalk Retail.

I'm Anne Mazinga.

And I'm Chris Walton.

And we are here coming to you live, covering everything that's happening here at NRF 2025 from the Vision Group, booth number 4938.

And standing between Chris and myself today is Mark Williamson, the AVP of retail media for Costco.

Mark, welcome to omnitalk.

Hi.

Thank you.

Thanks for having me.

We're excited to have you here.

How's the show been going so far?

So been going very well, very busy and lots of good conversations happening and a lot of cool technology to see.

Good.

We had not met you prior to this, so thanks for joining us.

We got to get to know you a little bit before we started recording here, but tell the audience a little bit about who you are, your background, and your role at Costco.

Yeah, so I've been at Costco for about a year and a half, responsible for building out a formalized retail media program.

Okay.

Before that, couple stints with retailers, spent a couple of years at Sam's Club, built, I would say, the first iteration of retail media, kind of shopper marketing at Sam's.

Then I spent a few years at AJO delhez.

Oh.

Built out retail media data partnerships and then retail and then shopper marketing programs for them.

Okay.

And then spent a little bit of time on the vendor side about a year and a half with Citrus Ad Epsilon.

Oh, wow.

Okay.

Our publicist group.

So, yep, you've covered the full gamut of every angle of retail media.

It seems like you spoke at nrf.

I did.

What did you talk about?

So I talked about Costco.

So shocker, shocker.

What specifically about retail media at Costco did you talk about, Mark?

So I spoke more about Costco than I did retail media.

Okay.

I did that on purpose.

And so we're being very deliberate about how we're approaching retail media.

We've.

The way that we've characterized it, we kind of have last mover advantage.

We are perhaps the largest non mover in retail media in the space.

And that's really, really was done on purpose.

And the point is that Costco doesn't do anything that doesn't serve our core purpose of delivering value to our members every day.

And retail media is a B2B business.

It's a profit center.

It's an ancillary revenue stream.

And which is all well and good, but we want to make sure that whatever we do is specifically serving that core purpose of providing value to our members.

So what I talked about was a lot about the core model, about how our ambition is to use retail media to grow our member base, grow traffic and grow sales.

We're a top line sales organization.

Top line sales translates to more membership renewal.

More membership renewal is what helps us keep the lights on.

Right.

And so retail media is in service to that larger ideal.

I love that last mover advantage.

I'd never heard that before, but that helps explain a lot in terms of, I imagine, how Costco looks at things.

So let's switch to retail media though.

So for Retail Media in 2025, how would you sum up the state of the industry and where do you think the opportunities lie for you and your role at Costco?

Yeah, I mean, we've heard a lot about standardization and consolidation because it's, it's a very, I mean, it's a hot space.

New retail media networks come online all the time.

Seems like every day.

Every day.

And on the media buying side, it's very fragmented.

It can be confusing, it can be overwhelming.

And I think it's an environment where the biggest fish eat the most.

I'm happy to be working for a big fish.

I feel like we have a right to win.

But the thing that I'm perceiving, whether it's for Costco or what I'm seeing from some of our peers, is this intention to own the network itself, to own the business as much as possible.

And so if I go back to when I first started doing this in 2010, we didn't have in house teams, we didn't have expertise, myself included.

But we recognized an opportunity kind of in the monetization space and we relied on full service monolithic agencies to help us first with kind of services, and then that grew into technology partnerships.

And what transpired as the business grew was retailers became very reliant on external agents to help grow the business as quickly as possible.

I think we reached a phase where if we look at the lead dogs like Amazon and Walmart and Target and Kroger and others that have really staked their claim in this and have really invested in talent and technology to be able to do this really well.

I think more and more retailers are going to continue to figure out what of this part of this business can I manage on my own, what do I need help with?

But more importantly though, how do I be the driver of my own ship at all times?

Right.

How do you control your own destiny, so to speak, in the space?

That's what your, that's where your opportunity lies?

Well, yeah, Absolutely.

And I think the technology and the talent pool have advanced to the point where retailers can do this.

You don't have to go all in and get a ton of capital in order to do it.

I don't think we need to necessarily create any new technologies ourselves.

There are tons of, of different solutions out there.

The trick though is to keep it modular, to own what we should own, whether that's our data, our member experience, or whatever it may be, and then go lean on modular, flexible partners who are leading edge in the thing that they do.

So if I interpret what you say you're saying, you're really focused on the architecture of how you're going to do this retail media business at Costco.

Yeah, absolutely.

And I think the past would have been more like set it and forget it.

You find a partner, you negotiate terms, you give them license to certain data or certain spots on a website, and then they send you a check at the end of every month as your revenue share.

But you could run that, you could run that business with one person or a handful of people and that can work.

But I think the idea though is like the architecture matters because if we want to be more in control and have more ownership and do the things that we should do, that is a much more deliberate, purpose built decision.

So that's what we're doing at Costco for sure.

Because as we were mentioning earlier, it is essential that our retail media program reflect our core member value proposition.

Good stuff.

Mark, how are you set up in your, how is retail media set up at Costco, specifically?

Like, how close is merchandising involved in your team?

Like, is it a media organization and a merchandising organization or where are the lines there?

Yeah.

So currently my team is organized under our membership and marketing team.

So we would be in a traditional kind of corporate marketing role.

But we have been very, we've been adamant that retail media needs to be organized horizontally across our business.

Okay.

So the reporting relationships and dotted lines and solid lines, that sort of thing, like I'm not too concerned with, but the, the only value that we can generate and then go and offer to the general marketplace is if, is if we are capturing the full value of the Costco experience.

And that's where merchants and operators come in.

And so I've definitely done this in the past where you kind of work around merchants because they don't necessarily understand marketing and media, they don't have the time for it.

And, and, and it can definitely be easier to do it that way.

But we are Working very hard to make sure that our merchandising and our marketing and our retail media are closely aligned.

Because the way that I would describe it is I've been reminded multiple times by our chief merchant, selling through supply quicker doesn't necessarily represent incremental growth for us.

Right.

And so the buying decisions have to be correlated with the marketing and the retail media decisions.

Because if we're going to do our job to drive incremental demand, then that means that we probably should have some incremental supply.

And that means that we have to be lockstep with our merchants.

Yeah, we have a very unique merchandising strategy and assortment where we do a lot of in and outs.

Right.

We have usually one national brand and then we have Kirkland Signature.

Right.

And so we'll, we'll be disappointing our members if we are.

If we're promoting items that don't have sufficient supply to meet demand.

And you have individual, like regional buying offices.

Right.

So you're not, you're not doing one central buying office and different products are in different, are tested in different markets.

Absolutely.

So like on average we have about 35 to 4,500 SKUs in any one warehouse.

But at any, we may have 40 to 50 items in our portfolio because there is so much regional buying.

Where do you see this going?

And especially I'm curious, like, how do you feel, like you mentioned, there's a new media retail media network coming up every day.

How is Costco?

Do you feel uniquely positioned to kind of win in this space, especially as we head into the new year?

So I think time will tell what it looks like.

Fair answer.

It's a common question that I get is how high is high, how much headroom is there?

What I look at and say retail media is not greater than the Costco story.

Our merchandise tells the story and then our members react to that the way that they do.

And if our buyers are doing what they've done for over 40 years and they're buying the highest quality item and they're putting at the lowest possible price, that's going to drive growth of our member base and growth of top line sales in perpetuity.

That model works incredibly well.

And we really challenge ourselves to say what role can retail media play in accelerating that growth or maybe driving growth in incremental ways that our base model otherwise could not do.

So we look at leveraging data and advertising technology to find those pockets of growth.

The example we give is generally we're really good net fishers.

We do a Lot of mass merchandising, a lot of mass communication.

And because our merchants and operators are so good at what they do, we move through a lot of stuff, stuff a lot of volume.

And we're looking at retail media.

Can we be more spear fishers?

Can we find those fish that are, are beyond our nets?

Put the right kind of the right item, the right offer in front of them to drive incremental demand.

So that's what we really get the most excited about.

But whatever we do will be in service to the Costco model because there's a lot we could get, we could get into data monetization, we can get into audience monetization.

There's other things that other retailers are doing that would be financially advantageous pages for us, but would be too far away from our core business model.

So like there may be, people think, hey, Costco has grown and, and retail media, Costco is great, but it could do more.

That might be where we say, hey, you know what, that's enough.

Yeah, we've done what we set out to do.

Right.

Interesting.

The concept of velocity and the business model are really, really intriguing.

I've never thought about that before.

So would you think then that retail media will evolve differently in the warehouse sector because of that than say grocery or how do you think about that?

I think it's entirely possible because of the curated assortment.

There's already some nuances.

There's club packaging, there's, I mentioned the in and outs and there's, there's not the variety.

Like we don't have category managers who are looking at a variety of sizes and flavors.

They're, they're picking, you know, the best possible item for the men.

Things to move quickly already.

Absolutely.

But like from a supplier perspective or if you're a brand or an agency, if you can drive conversion at Costco, you're basically, you're basically moving so much volume in one transaction.

And so the return on ad spend is actually quite attractive.

Where you can get one purchase is three months of usage or, and then, and then that helps in, you know, kind of like from a lifetime value perspective, not to mention loyalty side of things.

Yeah, not to mention, you know, from a traceable transaction perspective being able to do closed loop measurement a lot easier than some other retailers are able to do.

But that, that gives us the opportunity to put the most relevant messaging in front of our members, help them discover the best items that they'd be most interested in and that's it.

Like we are, we're holding ourselves to a Very high standard to make sure that we are complementary to the discovery and the treasure hunt process which is endemic to the Costco experience.

That's what I'm picking up.

Like if I read between the lines, are you saying that too that there's probably an opportunity for an expanded assortment online to play up with the retail media side from the advertising standpoint or how should we think?

How should we think about that?

How should our audience think about that?

I mean it's possible.

So we already have like our E Comm strategy is to be complementary to the warehouse.

You're already doing that, right?

Yeah, there is, but it's still curated.

So like this idea of like a Costco's promise and like an endless aisle, a kind of open ended marketplace, I don't think we'll ever be in our future.

But we do see an opportunity like if you're an online only item.

And a lot of our marketing thrust is more in print channels or in the warehouse experience, like being able to replicate that process of discovery is very important.

And so we are definitely looking for ways to utilize best practices in retail media to make sure that all of our suppliers have the opportunity to reach the right member.

Makes sense.

Great.

Mark, let's close out with what you are going to prioritize for 2025.

So we are prioritizing our, I say our data foundations.

Okay, tell us a little bit more about that.

Yeah, so we, when I, when I assess the opportunity to join Costco and to join, to do this, to do this job, like it's easy to look at and say Costco has all of the elements required to succeed at retail media.

There's data, there's traceable transactions, there's high brand equity and affinity.

There's growth in terms of the member base and a merchandise sales and of warehouses.

We have site traffic, we have scale, we have great relationships with our vendors.

Everything is there.

But what we've really focused on is making sure that whatever we build from here, whatever we want to own, whatever we want to control or whatever we want to drive, that it is built on a solid foundation of all of the, all of the data that we have available.

And we don't think that we can put relevant messaging in front of our members.

If we don't do that, they trust us a lot, not only be their buying agents, but also to help them discover the right items.

And so we're moving forward very cautiously and making sure that we have our data foundations and place and then a lot of innovation will happen on top.

Of that it's a great, great answer.

The best it's our opinion and in my eyes both that the best retail leaders, whenever we ask them what their priorities are, the best ones always say data.

So well, well, well done.

The ones that really get the punchline to the joke.

So kudos to you for that.

All right, man.

Mark, thank you so much for joining us.

It's a real pleasure to have you to pick your brain about retail media and how it evolves in warehouse clubs versus grocery stores, the whole nine yards.

So we really appreciate you taking the time time with us and thanks to Fusion Group for supporting our coverage here at nrf.

We're at there they are.

And we are both at booth 4938.

If you want to stop by, check out their tech.

Say hello to us.

We'll be here all show long.

And until next time and be careful out there.