Shownotes
In this interview, we’re live from NRF 2025 at the VisionGroup booth with Mark Williamson, AVP of Retail Media at Costco. Mark shares Costco's strategic approach to retail media, emphasizing their focus on member value, data foundations, and merchandising collaboration. Learn how Costco plans to use retail media to enhance member experiences and drive top-line growth while leveraging their unique "last mover advantage."
Key Moments:
- 0:20 - Introduction to Mark Williamson and his role at Costco.
- 1:32 - Mark discusses Costco's approach to retail media and their "last mover advantage."
- 2:20 - The core purpose of retail media at Costco.
- 3:50 - Retail media trends and opportunities for 2025.
- 6:54 - The relationship between merchandising and retail media at Costco.
- 12:08 - Prioritizing data foundations for 2025 and beyond.
#nrf2025 #retailmedia #retailstrategy
This podcast uses the following third-party services for analysis:
Podcorn - https://podcorn.com/privacy
Transcripts
Hello, everyone.
Anne Mazinga:This is Omnitalk Retail.
Anne Mazinga:I'm Anne Mazinga.
Chris Walton:And I'm Chris Walton.
Anne Mazinga: that's happening here at NRF: Anne Mazinga:And standing between Chris and myself today is Mark Williamson, the AVP of retail media for Costco.
Anne Mazinga:Mark, welcome to omnitalk.
Mark Williamson:Hi.
Mark Williamson:Thank you.
Mark Williamson:Thanks for having me.
Anne Mazinga:We're excited to have you here.
Anne Mazinga:How's the show been going so far?
Mark Williamson:So been going very well, very busy and lots of good conversations happening and a lot of cool technology to see.
Chris Walton:Good.
Chris Walton:We had not met you prior to this, so thanks for joining us.
Chris Walton: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.
Mark Williamson:Yeah, so I've been at Costco for about a year and a half, responsible for building out a formalized retail media program.
Chris Walton:Okay.
Mark Williamson: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.
Mark Williamson:Then I spent a few years at AJO delhez.
Chris Walton:Oh.
Mark Williamson:Built out retail media data partnerships and then retail and then shopper marketing programs for them.
Chris Walton:Okay.
Mark Williamson:And then spent a little bit of time on the vendor side about a year and a half with Citrus Ad Epsilon.
Chris Walton:Oh, wow.
Mark Williamson:Okay.
Mark Williamson:Our publicist group.
Anne Mazinga:So, yep, you've covered the full gamut of every angle of retail media.
Anne Mazinga:It seems like you spoke at nrf.
Mark Williamson:I did.
Anne Mazinga:What did you talk about?
Mark Williamson:So I talked about Costco.
Mark Williamson:So shocker, shocker.
Anne Mazinga:What specifically about retail media at Costco did you talk about, Mark?
Mark Williamson:So I spoke more about Costco than I did retail media.
Anne Mazinga:Okay.
Mark Williamson:I did that on purpose.
Mark Williamson:And so we're being very deliberate about how we're approaching retail media.
Mark Williamson:We've.
Mark Williamson:The way that we've characterized it, we kind of have last mover advantage.
Mark Williamson:We are perhaps the largest non mover in retail media in the space.
Mark Williamson:And that's really, really was done on purpose.
Mark Williamson: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.
Mark Williamson:And retail media is a B2B business.
Mark Williamson:It's a profit center.
Mark Williamson:It's an ancillary revenue stream.
Mark Williamson: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.
Mark Williamson: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.
Mark Williamson:We're a top line sales organization.
Mark Williamson:Top line sales translates to more membership renewal.
Mark Williamson:More membership renewal is what helps us keep the lights on.
Anne Mazinga:Right.
Mark Williamson:And so retail media is in service to that larger ideal.
Chris Walton:I love that last mover advantage.
Chris Walton:I'd never heard that before, but that helps explain a lot in terms of, I imagine, how Costco looks at things.
Chris Walton:So let's switch to retail media though.
Chris Walton: So for Retail Media in: Mark Williamson: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.
Mark Williamson:New retail media networks come online all the time.
Chris Walton:Seems like every day.
Mark Williamson:Every day.
Mark Williamson:And on the media buying side, it's very fragmented.
Mark Williamson:It can be confusing, it can be overwhelming.
Mark Williamson:And I think it's an environment where the biggest fish eat the most.
Mark Williamson:I'm happy to be working for a big fish.
Mark Williamson:I feel like we have a right to win.
Mark Williamson: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.
Mark Williamson: I first started doing this in: Mark Williamson: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.
Mark Williamson:And what transpired as the business grew was retailers became very reliant on external agents to help grow the business as quickly as possible.
Mark Williamson: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.
Mark Williamson: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?
Mark Williamson:But more importantly though, how do I be the driver of my own ship at all times?
Mark Williamson:Right.
Chris Walton:How do you control your own destiny, so to speak, in the space?
Chris Walton:That's what your, that's where your opportunity lies?
Mark Williamson:Well, yeah, Absolutely.
Mark Williamson:And I think the technology and the talent pool have advanced to the point where retailers can do this.
Mark Williamson:You don't have to go all in and get a ton of capital in order to do it.
Mark Williamson:I don't think we need to necessarily create any new technologies ourselves.
Mark Williamson:There are tons of, of different solutions out there.
Mark Williamson: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.
Chris Walton: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.
Mark Williamson:Yeah, absolutely.
Mark Williamson:And I think the past would have been more like set it and forget it.
Mark Williamson: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.
Mark Williamson:But you could run that, you could run that business with one person or a handful of people and that can work.
Mark Williamson: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.
Mark Williamson:So that's what we're doing at Costco for sure.
Mark Williamson:Because as we were mentioning earlier, it is essential that our retail media program reflect our core member value proposition.
Chris Walton:Good stuff.
Anne Mazinga:Mark, how are you set up in your, how is retail media set up at Costco, specifically?
Anne Mazinga:Like, how close is merchandising involved in your team?
Anne Mazinga:Like, is it a media organization and a merchandising organization or where are the lines there?
Mark Williamson:Yeah.
Mark Williamson:So currently my team is organized under our membership and marketing team.
Mark Williamson:So we would be in a traditional kind of corporate marketing role.
Mark Williamson:But we have been very, we've been adamant that retail media needs to be organized horizontally across our business.
Anne Mazinga:Okay.
Mark Williamson: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.
Mark Williamson:And that's where merchants and operators come in.
Mark Williamson: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.
Mark Williamson:And, and, and it can definitely be easier to do it that way.
Mark Williamson:But we are Working very hard to make sure that our merchandising and our marketing and our retail media are closely aligned.
Mark Williamson: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.
Anne Mazinga:Right.
Mark Williamson:And so the buying decisions have to be correlated with the marketing and the retail media decisions.
Mark Williamson:Because if we're going to do our job to drive incremental demand, then that means that we probably should have some incremental supply.
Mark Williamson:And that means that we have to be lockstep with our merchants.
Mark Williamson:Yeah, we have a very unique merchandising strategy and assortment where we do a lot of in and outs.
Anne Mazinga:Right.
Mark Williamson:We have usually one national brand and then we have Kirkland Signature.
Anne Mazinga:Right.
Mark Williamson:And so we'll, we'll be disappointing our members if we are.
Mark Williamson:If we're promoting items that don't have sufficient supply to meet demand.
Anne Mazinga:And you have individual, like regional buying offices.
Anne Mazinga:Right.
Anne Mazinga:So you're not, you're not doing one central buying office and different products are in different, are tested in different markets.
Mark Williamson:Absolutely.
Mark Williamson:So like on average we have about 35 to 4,500 SKUs in any one warehouse.
Mark Williamson:But at any, we may have 40 to 50 items in our portfolio because there is so much regional buying.
Anne Mazinga:Where do you see this going?
Anne Mazinga: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.
Anne Mazinga:How is Costco?
Anne Mazinga:Do you feel uniquely positioned to kind of win in this space, especially as we head into the new year?
Mark Williamson:So I think time will tell what it looks like.
Anne Mazinga:Fair answer.
Mark Williamson:It's a common question that I get is how high is high, how much headroom is there?
Mark Williamson:What I look at and say retail media is not greater than the Costco story.
Mark Williamson:Our merchandise tells the story and then our members react to that the way that they do.
Mark Williamson: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.
Mark Williamson:That model works incredibly well.
Mark Williamson: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.
Mark Williamson:So we look at leveraging data and advertising technology to find those pockets of growth.
Mark Williamson:The example we give is generally we're really good net fishers.
Mark Williamson:We do a Lot of mass merchandising, a lot of mass communication.
Mark Williamson: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.
Mark Williamson:And we're looking at retail media.
Mark Williamson:Can we be more spear fishers?
Mark Williamson:Can we find those fish that are, are beyond our nets?
Mark Williamson:Put the right kind of the right item, the right offer in front of them to drive incremental demand.
Mark Williamson:So that's what we really get the most excited about.
Mark Williamson: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.
Mark Williamson: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.
Mark Williamson:So like there may be, people think, hey, Costco has grown and, and retail media, Costco is great, but it could do more.
Mark Williamson:That might be where we say, hey, you know what, that's enough.
Mark Williamson:Yeah, we've done what we set out to do.
Anne Mazinga:Right.
Chris Walton:Interesting.
Chris Walton:The concept of velocity and the business model are really, really intriguing.
Chris Walton:I've never thought about that before.
Chris Walton: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?
Mark Williamson:I think it's entirely possible because of the curated assortment.
Mark Williamson:There's already some nuances.
Mark Williamson:There's club packaging, there's, I mentioned the in and outs and there's, there's not the variety.
Mark Williamson:Like we don't have category managers who are looking at a variety of sizes and flavors.
Mark Williamson:They're, they're picking, you know, the best possible item for the men.
Chris Walton:Things to move quickly already.
Mark Williamson:Absolutely.
Mark Williamson: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.
Mark Williamson:And so the return on ad spend is actually quite attractive.
Mark Williamson: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.
Mark Williamson: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.
Mark Williamson: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.
Mark Williamson: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.
Chris Walton:That's what I'm picking up.
Chris Walton: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?
Chris Walton:How should we think about that?
Chris Walton:How should our audience think about that?
Mark Williamson:I mean it's possible.
Mark Williamson:So we already have like our E Comm strategy is to be complementary to the warehouse.
Chris Walton:You're already doing that, right?
Mark Williamson:Yeah, there is, but it's still curated.
Mark Williamson: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.
Mark Williamson:But we do see an opportunity like if you're an online only item.
Mark Williamson: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.
Mark Williamson: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.
Chris Walton:Makes sense.
Chris Walton:Great.
Anne Mazinga: u are going to prioritize for: Mark Williamson:So we are prioritizing our, I say our data foundations.
Anne Mazinga:Okay, tell us a little bit more about that.
Mark Williamson: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.
Mark Williamson:There's data, there's traceable transactions, there's high brand equity and affinity.
Mark Williamson:There's growth in terms of the member base and a merchandise sales and of warehouses.
Mark Williamson:We have site traffic, we have scale, we have great relationships with our vendors.
Mark Williamson:Everything is there.
Mark Williamson: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.
Mark Williamson:And we don't think that we can put relevant messaging in front of our members.
Mark Williamson: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.
Mark Williamson: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.
Chris Walton:Of that it's a great, great answer.
Chris Walton: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.
Chris Walton:So well, well, well done.
Chris Walton:The ones that really get the punchline to the joke.
Chris Walton:So kudos to you for that.
Chris Walton:All right, man.
Chris Walton:Mark, thank you so much for joining us.
Chris Walton: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.
Chris Walton:So we really appreciate you taking the time time with us and thanks to Fusion Group for supporting our coverage here at nrf.
Chris Walton:We're at there they are.
Chris Walton: And we are both at booth: Chris Walton:If you want to stop by, check out their tech.
Chris Walton:Say hello to us.
Chris Walton:We'll be here all show long.
Chris Walton:And until next time and be careful out there.