Woolworths reported strong growth in its retail media arm, Cartology, in the March quarter, as the supermarket group leverages surging digital traffic.
The company, in its third quarter trading update, reported weekly average traffic to digital platforms of 28.2 million driven by increased traffic to apps.
WooliesX, the digital and innovation hub of the Woolworths Group, reported total sales up 15.6% to $2.391 billion
Weekly average traffic to Food and Everyday digital platforms hit 19.4 million with Woolworths app users increasing by 21.7%.
At the same time, revenue at Cartology grew by 29.1% with strong growth across the portfolio.
The growth was driven by a collectibles campaign and continued expansion of its retail media business. The company has rolled out in-aisle video on its website.
Everyday Reward, with members at 10.3 million, increased sales 10.4%.
Analysts at Citi have a neutral rating on Woolworths on the back of a lower earnings growth environment for the Australian food business with higher discount activity as customers increasingly look for value.
However, they see gross margin opportunities in Cartology.
Suppliers to Woolworths, and competitor Coles with its Coles 360, are encouraged to spend on advertising via the supermarket groups’ retail media platforms.
Morgan Stanley forecasts retail media spending in Australia on in-house/owned ad platforms to grow to $2.8 billion in 2027 from around $1 billion in 2022.
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