The Retailer Became the House: How Brands Ended Up Paying for Access

The following is adapted from Competing at Machine Speed by Jeriad Zoghby, Joan Smith, and Roald van Wyk.

The retailer used to bring brands to the consumer. Now brands pay the retailer to reach one.

That relationship did not erode gradually. It flipped. And brands still operating on the old logic are funding, at accelerating cost, the very apparatus that replaced it.

How Convenience Became a Trap

In 2019, curbside pickup was a novelty. Then 2020 happened, and within eighteen months, curbside and home delivery went from optional to mandatory. It was enormously expensive. Picking an individual grocery order costs multiples more than restocking a shelf shoppers browse themselves.

Retailers could absorb that cost or pass it along. They chose a more profitable third option: they passed it to brands as escalating requirements for access to the digital channel. Media spend. Content compliance. Data partnerships. Priority placement.

I saw the brand side of this when I spoke with the CEO of a diaper business. His consultants framed new digital channels as a route to growth. I told him the only things that create more diaper sales are more parents, more babies, and more baby poop. A parent who can buy the same pack four ways doesn’t buy four times as many diapers. Convenience multiplied the ways to buy. It did not multiply demand. It multiplied the cost of serving it.

The Value Chain Reversal

For most of the twentieth century, the retailer’s most valuable asset was the brand on its shelf. Tide brought shoppers to Walmart. Campbell’s brought them to Kroger. Both parties grew together.

Digital retail eliminated the constraint of physical space, and with it, the value of the shelf. What replaced it was the audience. An online retailer with millions of shoppers, purchase history on each of them, and the ability to target people at the moment they intend to buy is not a distributor. It is a media company.

Amazon understood this early. Walmart Connect, Kroger Precision Marketing, and Target’s Roundel followed. Three years after Walmart Connect launched, Walmart’s CFO told investors that advertising had grown to almost a third of the company’s operating income for the quarter.

What Brands Are Actually Buying

Retail media increasingly feels less like marketing and more like a daily slotting fee. You pay it not to grow but to maintain. Stop paying, and the algorithm routes shoppers to competitors who will.

Meanwhile, the operational costs of retail have moved upstream. Content tailored to each retailer’s schema, syndication, analytics subscriptions, and public review management all now fall on the brand. For much of most portfolios, the math no longer works.

Then there’s the dupe problem. On an infinite, uncurated digital shelf, copycats can mimic an established brand’s packaging and claims and appear right beside it. Decades of brand equity become one thumbnail in a grid.

The retailer did not betray the brand. The retailer followed the economics to where the margin went. Brands that understand this shift are positioned to compete.

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For more advice on navigating the modern brand-retailer relationship, you can find Competing at Machine Speed on Amazon.

Jeriad Zoghby, PhD, is co-founder and CEO of ACOS Labs, which builds AI-native commercial intelligence for consumer goods. He has spent twenty-five years building the intelligent systems that run modern enterprises.

Joan Smith has spent more than twenty years shaping and leading operating model transformation across the world’s largest companies. Today, she is an author, practicing herbalist, and advisor to senior executives.

Roald van Wyk is co-founder and CCIO of ACOS Labs. He has spent nearly three decades helping the world's largest consumer brands across four continents navigate every transformation in commerce, branding, and artificial intelligence.