The conundrum of scaling retail media in 2026

The year ahead will test the resilience of retail media networks, thanks in large part to AI.

Retail media is a relatively new marketing channel that sprung up with the rise of Amazon’s ads platform in 2012, and changed the game for digital advertising on retail websites. However, agentic AI is expected to push regular digital advertising on retail sites out of the spotlight.

Lately, the retail media conversation has shifted—brands are rethinking where to spend ad dollars and how to show up when AI agents shop without ever visiting retailers’ websites. So where does the on-site ad inventory sitting with retailers go? This uncertainty makes scaling retail media—deciding where to invest in new ad space and how to grow ad revenue—a major challenge for retailers.

In fact, Josh Krepon, president of US DTC and global digital at Steven Madden, questioned whether retail media was even going to grow over the next two years given everything that the industry has heard about agentic AI. Krepon’s hot take is that only Amazon will survive. “Outside of Amazon, I feel like there’s going to be real impact with agentic in a meaningful way,” Krepon said at NRF in January 2026.

Store theater

Scaling retail media in 2026 will depend on how flexible retailers are with their strategies. Retailers with stores can focus on in-store retail media, Kiri Masters, retail media industry analyst, wrote in her LinkedIn newsletter, “Retail Media Breakfast Club,” in January, because in-store advertising won’t be disrupted by AI in the same way digital ads are.

“While digital retail media faces existential questions from AI agents, physical stores remain largely untouchable,” Masters wrote. “People will still visit stores, still see endcaps and shelf displays, still respond to the theatre of in-store retail.”

Andrew Lipsman, independent retail media analyst at Media, Ads + Commerce, agreed. This is an “inflection point for in-store retail media,” he told Retail Brew, adding it’s taken retailers years to actually install in-store screens..

Until now, Lipsman pointed out, only a few retailers like Hyvee, CVS, and some regional grocers had meaningful screen deployments in their stores. “Now, you’ve got Kroger and Albertsons coming into the market in a big way,” he said. “All of the sudden, you’ve got the supply. You’ve got retailers who have a lot of currency with advertisers. That’s what’s going to make the market.”

In-store retail media ad spending is set to hit the billion-dollar mark by 2029, eMarketer projected. Best Buy is already capitalizing on the 2026 World Cup as a major advertising opportunity. Kroger has also been working on plugging “animated content” from brands on the screens in its stores.

Proceed with caution

“The retailers most at risk from agentic commerce are those heavily dependent on e-commerce,” Masters cautioned. “Those with strong physical presence have a natural hedge if they invest in making those in-store moments matter.”

Some of the other growing pains within retail media include tackling efficiency bottlenecks, expanding channels, scaling data infrastructure, and fixing attribution reporting.

Ultimately, one expert said, in addition to plugging ads into screens inside stores, retailers should apply the basics of retail, aka protect profits, maintain operational excellence, and build customer loyalty to grow their ads business.

“The retailers who will thrive in retail media networks are not necessarily those making the biggest media splash,” Larry Payne, senior director for business development at Stratacache, wrote in a LinkedIn post. “Instead, success will come to those who can operationalize their RMN seamlessly in-store while sticking to their fundamental principles.”