The Impact of AI and Retail Media on Digital Sales Operations

Technological advances, the hyperconnectivity of consumers, and the increasing demand for personalized experiences are the main drivers of the accelerated digital transformation occurring in the digital ecosystem of Ibero-America.

Regardless of how this transformation manifests in each country of the region, we cannot ignore the fact that artificial intelligence and retail media have become key tools for retailers and brands to optimize their operations, improve the customer experience, increase sales through digital channels, and harness the volume of data to make a significant impact on offline channels. The question is how to do this strategically and effectively.

Based on examples like Falabella or Cencosud (Chile), Mercado Libre and Farmacity (Argentina), Grupo Éxito and Rappi (Colombia), or Magazine Luiza (Brazil), to name a few, AI is already transforming operations in several key areas of retail.

One of its most effective uses is in inventory and supply chain management. Through AI, retailers are beginning to predict demand with greater accuracy, analyzing historical data combined with real-time factors such as changes in consumer trends or weather patterns, and optimizing inventory levels, reducing both excess stock and out-of-stock items — a critical factor in digital commerce where delivery expectations are rising.

Of course, Amazon is a clear example of how logistics efficiency is taken to another level thanks to these intelligent systems.

The customer experience is another area where AI is making a significant difference, especially given that consumers expect a high degree of personalization in their interactions with brands. By analyzing both online and offline behavior patterns, companies can create detailed customer profiles and offer tailored recommendations suited to individual needs.

This level of hyper-personalization is not reserved only for retailers who can make large investments; it is a tool that drives sales, increases customer loyalty, and is increasingly accessible to small retailers or startups that act as intermediaries in the collaborative and unified model. With this technology, they leverage their capabilities within an ecosystem aimed at creating a frictionless shopping experience, where consumers can receive product recommendations and make quick, easy purchases.

Retail Media: The New Battleground for Advertising

In this context, an old and well-known player in strategic planning appears on the digital scene: retail media, which is making a comeback to change the rules of digital advertising. For both retailers and brands, it is a unique opportunity to monetize the data generated by that perfect trifecta: customers, stock-keeping units (SKUs), and square meters, allowing them to generate additional advertising revenue and leveraging not only the reach of digital but also that of unified commerce, especially in cases where the physical store offers a unique and highly valued advantage today.

How does this work? By integrating data (such as purchase behavior) with targeted ads, companies can offer personalized campaigns at the right time, ensuring their customers receive relevant messages and increasing conversion rates.

Retailers like Falabella and Cencosud are already implementing this. Instead of relying solely on traditional advertising, they now use internal data to launch hyper-targeted marketing campaigns, allowing advertisers to reach more precise audiences while benefiting from the deep understanding retailers have of their consumers and the entire end-to-end journey, from pre-purchase, purchase, to post-purchase.

The key to retail media’s success lies in its ability to integrate these advertising strategies with other business operations. It is not just about generating revenue through advertising; it’s about enhancing the overall shopping experience. A win-win for everyone involved in this strategy.

In physical stores, for example, digital screens and in-store signage systems display location-based and customer behavior-based ads. While online stores already do this, the real potential lies in combining both spheres.

I must say that one of the major benefits of both AI and retail media is the ability to measure and adjust strategies in real time. In the past, digital advertising relied on simple attribution models that often failed to capture the entire customer journey. Today, thanks to advances in data analytics and machine learning, it is possible to track the consumer journey with unprecedented precision, allowing businesses to adjust campaigns on the fly and optimize advertising budgets to maximize return on investment. 

An example of this is the end-to-end attribution model used in retail media. With this model, brands can see how each interaction with a customer influences their purchase decision, from viewing an ad to final conversion. This level of detail provides valuable insights into consumer behavior that ultimately help improve future strategies.

In short, the use of AI and the implementation of the retail media model in retailers' and brands' operations is already permeating our digital ecosystem, becoming another driver for transformation.

If we consider this constant digital Darwinism that we live in, as part of this industry, the fact that transforming the known into a new and powerful growth and profitability tool makes every transformation necessary to survive and thrive.

That is why, and only because we are responsible for this infinite flywheel, we must adopt these tools as a unique opportunity to connect with consumers, understanding that their expectations are constantly evolving.

The best part of all this is that we do not need to look far to analyze the impact of retail media in the region; the giants of Ibero-America are already giving us plenty of material to start creating our own models.