Raphael Stevens

Ford Motor said Tuesday the factory that builds its electric F-150 Lightning pickup has reopened after a six-week break for upgrades.
Recent price cuts on the EV spurred a sixfold increase in new orders.
Ford’s Rouge Electric Vehicle Center in Dearborn, Michigan, will be able to produce Lightnings at an annual rate of 150,000 vehicles — three times its previous output — by the end of September.

Ford Motor Company’s electric F-150 Lightning on the production line at their Rouge Electric Vehicle Center in Dearborn, Michigan on September 8, 2022. 
Jeff Kowalsky | AFP | Getty Images

Ford Motor said Tuesday the factory that builds its electric F-150 Lightning pickup has reopened after a six-week break for upgrades — and that recent price cuts on the EV have led to a significant increase in demand.
Ford cut the Lightning’s prices by as much as $10,000, depending on trim level, last month. The least expensive version of the truck now starts at about $50,000.

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Those price reductions spurred a sixfold increase in new orders for the Lightning, said Marin Gjaja, chief customer officer for Ford’s “Model e” EV unit, in a Tuesday press briefing.
While he declined to provide specific numbers, Gjaja did say that Ford now has “about 45 days’ worth” of orders for the electric truck.
More than half of new orders for the Lightning are for trucks with the higher-priced XLT trim, which starts at about $55,000 with 240 miles of EPA-estimated range, Gjaja said. Ford is modifying its production mix to increase supplies of the Lightning XLT, he said.
But recent production downtime means Lightning delivery totals will be modest until September, he said. Deliveries should ramp sharply once the upgraded factory hits its stride.
“We expect sales will start to significantly increase in later September, and certainly in October as supply begins to rapidly ramp in the latter half of the year,” Gjaja said.

Ford said Tuesday its Rouge Electric Vehicle Center, the Lightning’s factory in Dearborn, Michigan, has resumed production of the truck after a planned shutdown to make upgrades. The factory will be able to produce Lightnings at an annual rate of 150,000 vehicles — three times its previous output — by the end of September.
The factory has hired about 1,200 new employees to support the production increase, according to Debbie Manzano, Ford’s manufacturing director. Those new employees will complete training in about three weeks, she said.
Ford is also ramping up production at the factories that supply battery packs and electric motors for the Lightning, Manzano said. More

Angel Studios’ “Sound of Freedom” has generated nearly $150 million at the domestic box office since its July 4 debut.
The film has outpaced blockbuster-style features like Paramount’s “Mission: Impossible — Dead Reckoning Part One” and Warner Bros.’ “The Flash.”
The anti-sex trafficking thriller has struck a chord with older audiences, many of whom have not been back to theaters since before the Covid pandemic.

Jim Caviezel stars in Angel Studio’s “Sound of Freedom.”
Angel Studios

“Barbenheimer” isn’t the only phenomenon at the July box office.
Over the last four weeks, Angel Studios’ “Sound of Freedom,” an indie film that has drawn the support of former President Donald Trump and other conservatives, has captured nearly $150 million in domestic ticket sales.

The figure may seem small against Hollywood blockbuster performances from Warner Bros.’ “Barbie” and Universal’s “The Super Mario Bros.,” each of which has grossed several hundred million dollars, but it’s a solid theatrical run for a film that only cost $14.5 million to make.
It’s especially impressive considering Paramount’s Tom Cruise vehicle “Mission: Impossible — Dead Reckoning Part One” has tallied less than $140 million since its July 12 release and Warner Bros.’ DC Comics tentpole “The Flash” which barely topped $100 million domestically.
“Sound of Freedom” is also on the heels of Disney’s “Indiana Jones and the Dial of Destiny,” which has generated around $167 million in box-office grosses in the U.S. and Canada.
“Angel Studios deserves a tremendous amount of credit for designing and executing one of the most unexpected indie box office runs in years,” said Shawn Robbins, chief analyst at BoxOffice.com.
“Sound of Freedom,” which opened over the July 4th holiday weekend to the tune of $14.2 million, saw ticket sales exceed its debut during its second and third weekend in theaters, a rarity in Hollywood. Over the last two weekends, ticket sales drops for the movie have been under 40%.

Typically, blockbuster features will see at least 50% drops each week, receiving diminishing returns until the film finishes its run in theaters.
The slow fall for “Sound of Freedom” shows that audiences who may have missed out on the flick when it first opened have heard enough positive word of mouth about it to flock to cinemas weeks later.
In fact, the film initially only ran in around 2,600 theaters and has grown to more than 3,400 over the last few weeks. For comparison, both “Mission: Impossible — Dead Reckoning Part One” and “Indiana Jones and the Dial of Destiny” opened in more than 4,000 locations, according to Comscore data.
“‘Sound of Freedom’ is a summer movie success story that wasn’t even on the radar just a few short weeks ago,” said Paul Dergarabedian, senior media analyst at Comscore. “[It] has become one of the most talked about movies of the summer a film [and its] box office revenue has surpassed that of titles with much bigger stars, brands, and budgets.”
“Sound of Freedom” centers on Tim Ballard (Jim Caviezel), a character inspired by a real-life government agent who quits his job to rescue a young girl from sex traffickers in Colombia.
Part of “Sound of Freedom’s” box-office success has been a campaign from filmmakers to urge moviegoers to buy tickets that can be claimed online for future screenings by those who may not be able to afford them. Angel Studios calls the model “pay it forward” and has sold nearly 14 million of these tickets since the film’s release, according to the studio’s website.
“‘Sound of Freedom’s’ sustained success goes to show that grassroots campaigning still has a sizeable impact in this day and age and that the movie’s core audience remains overlooked and underserved,” Robbins said.
Angel Studios’ post-promotion method isn’t the only unique aspect of its business. The studio crowdfunded $5 million in order to distribute the film after 20th Century Fox, which previously held the rights to it, was bought by the Walt Disney Co. and shelved its release. “Sound of Freedom” wrapped filming in 2018.
The anti-sex trafficking thriller has struck a chord with older audiences, many of whom have not been back to theaters since before the Covid pandemic. It has also become popular in conservative political circles. Trump hosted a private screening of the film at his New Jersey-based golf club last month.
Also in attendance were Steve Bannon, Trump’s former chief strategist; Kari Lake, a former gubernatorial candidate from Arizona who backed Trump’s claims about election fraud during the last presidential election; and Jack Posobiec, an activist and TV correspondent who promoted the debunked claim that Democrats were using a pizzeria in Washington for a child sex ring.
House Speaker Kevin McCarthy, R-Calif., also held a screening of the film last week for members of Congress on both sides of the aisle.
“Often movies come along that fill a void in the marketplace,” Dergarabedian said, echoing Robbin’s comments about underserved theatrical audiences. “‘Sound of Freedom’ benefitted not only from this but also by providing a non-typical summer style movie experience.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

Pfizer on Tuesday reported second-quarter adjusted earnings that topped Wall Street’s expectations, but posted revenue that came in under estimates due to a steep drop in Covid product sales.
Pfizer is in a transition period as it pivots away from its blockbuster coronavirus vaccine and Covid antiviral drug Paxlovid while the world emerges from the pandemic.
The New York-based company will hold a conference call at 10 a.m. ET on Tuesday. 

Pavlo Gonchar | Lightrocket | Getty Images

Pfizer on Tuesday reported second-quarter adjusted earnings that topped Wall Street’s expectations, but posted revenue that fell short of estimates as Covid product sales plunged.
Pfizer reported second-quarter sales of $12.73 billion, down 54% from the same period a year ago.

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The company’s Covid vaccine raked in $1.49 billion in sales, down 83% from the year-ago quarter. Pfizer’s Covid antiviral pill Paxlovid posted $143 million in revenue, a drop of 98%.
Together, the products pulled in $1.6 billion in revenue for the quarter. That compares with roughly $17 billion in sales during the same period a year ago.
The decline isn’t a surprise. Pfizer and rival drugmakers like Moderna have seen a steep drop in Covid-related sales this year as the world emerges from the pandemic and relies less on blockbuster vaccines and treatments that help protect against the virus.
Here’s how Pfizer results compared with Wall Street expectations, based on a survey of analysts by Refinitiv:

Earnings per share: 67 cents per share adjusted, vs. 57 cents per share expected
Revenue: $12.73 billion, vs. $13.27 billion expected

Pfizer booked net income of $2.33 billion, or 41 cents per share. That fell from $9.91 billion, or $1.73 per share, during the same period a year ago. 

Excluding certain items, the company’s earnings per share were 67 cents per share for the quarter. 
Looking ahead, the New York-based company narrowed its 2023 sales forecast to $67 billion to $70 billion, from a previous forecast of $67 billion to $71 billion. 
Pfizer reiterated its full-year adjusted earnings outlook of $3.25 to $3.45 per share.
The company expects Covid-related sales to decline for the year. Pfizer reaffirmed its forecast of $13.5 billion in Covid vaccine sales in 2023 and $8 billion in revenue for Paxlovid.
Pfizer noted that guidance for the products is based on both existing supply contracts with governments and sales from the commercial market in the U.S. The company will start selling Covid-related products directly to health-care providers this fall. 
Pfizer’s stock price fell less than 1% in premarket trading. The company’s shares have dropped nearly 30% this year, putting Pfizer’s market value at roughly $203 billion.

Other drug products

Pfizer is in a transition period as it navigates a post-pandemic world. The company is pinning its hopes on mergers and acquisitions and a record pipeline to pivot to new areas of growth. 
Excluding Covid products, drugs from recently acquired companies largely fueled revenue. 
Those sales include Biohaven Pharmaceuticals migraine drug Nurtec ODT and Global Blood Therapeutics’ sickle cell disease treatment Oxbryta, which drew in $247 million and $77 million, respectively.
The company said revenue was also driven by strong sales of Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $782 million in sales, up 42% from the second quarter of 2022.
Other drugs weighed on revenue, however. 
Inflectra, a monoclonal antibody used to treat a range of inflammatory autoimmune diseases, posted $74 million in sales. That total fell 46% from the same period a year ago. 
Pfizer’s Ibrance, which treats a certain type of breast cancer, posted $1.24 billion in sales, down 6% from a year ago. 

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Investors are eager for executives to provide updates on Pfizer’s several near-term drug launches, which CEO Albert Bourla said in May will help grow non-Covid revenues “at a faster rate” during the second half of the year.
That includes Pfizer’s vaccine for respiratory syncytial virus and its updated Covid shot – both of which are slated to roll out during the third quarter.
Executives are also likely to be asked about the company’s $43 billion acquisition of cancer therapy maker Seagen – a deal Pfizer believes could contribute more than $10 billion in risk-adjusted sales by 2030. 
The U.S. Federal Trade Commission asked Pfizer and Seagen for more information on their proposed merger during the second quarter. The move came as the agency cracks down on similar deals in the pharmaceutical industry. 
Executives will also likely to address the tornado that hit Pfizer’s major plant in North Carolina after the company told hospitals last month that more than 30 drugs may see new supply disruptions due to the damage.
Pfizer is scheduled to hold a conference call at 10 a.m. ET on Tuesday.  More

Bed Bath & Beyond’s stores have officially shuttered but customers can still shop the brand through its relaunched website and app.
Overstock acquired Bed Bath’s intellectual property and ditched its own name in a bid to boost sales, acquire new customers and cement itself as a go-to home goods retailer.
Customers who download and shop the new app will receive a 25% off coupon.

Courtesy: BB&B

Shoppers still reeling from the loss of Bed Bath & Beyond can once again shop through its new website and app beginning on Tuesday.
Owner Overstock is betting the once-beloved brand can attract new customers and reverse its ongoing sales slump. 

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Bed Bath & Beyond’s brick-and-mortar stores closed after the company wrapped up liquidation sales on Sunday following its April bankruptcy filing. But the retailer will live on online after longtime rival Overstock won its intellectual property at auction in June. 
The e-commerce company, which has long felt its name was a detriment to its business, will instead merge its business under the Bed Bath & Beyond domain.
The newly launched website and app will feature the sorts of products that Bed Bath’s customers have come to love and expect, but it’ll also feature a wide assortment of goods in its revamped “beyond” category, which includes merchandise Overstock was already selling. It’ll also feature one of Bed Bath’s most beloved relics: plenty of coupons.

Courtesy: BB&B

“We have added over 600,000 new products since the deal was first announced in early June, most of them in the bedding, bath and kitchen area. But, historically, we’ve been strong in patio furniture, area rugs, mattresses, living room and dining room furniture,” Overstock CEO Jonathan Johnson told CNBC. “So the customer can expect a breadth and depth of products they haven’t seen before.” 

The strategy behind the rebrand

Overstock acquired Bed Bath & Beyond because of the retailer’s strong branding and cult-like following in the hopes it could revive its top and bottom lines.

In the quarter ended June 30, Overstock reported a 20% drop in sales compared to the year-ago period, a nearly 30% drop in active customers and slowdowns in orders delivered, average order values and the number of orders per active customer. 
Johnson attributed the slowdowns in part to overall softness in the home goods category and the economy as a whole, but he pointed to Overstock’s name as a factor, too.
“Rebranding to a name that is synonymous with home, rather than pushing, slogging forward with a name that was mistakenly confused with liquidation, something we haven’t done in two decades, will help us cut through some of the difficulty of the current economy,” said Johnson. 
“We’re self aware enough to know that nobody, not even my children, would put ‘registered at Overstock.com’ on their wedding announcement, baby announcements, but they will put ‘registered at Bed Bath & Beyond’ on both those announcements. So it’s a name that people like, they’re proud of, that they want to be associated with.” 
The rebranding also helps Overstock with business relationships, Johnson said. Certain vendors that Overstock previously worked with didn’t allow them access to their entire product category because they didn’t want that merchandise associated with Overstock. Now that the company has rebranded, those vendors are willing to expand their offerings, which helps Overstock provide a wider range of desirable merchandise, said Johnson. 

Courtesy: BB&B

The company plans to phase out the Overstock brand “over time,” it said in a news release.  
The chief executive was reluctant to share any specific guidance on how the acquisition will affect sales in the quarters and years ahead, because “it’s still such an unknown.” But he noted Overstock’s launch of Bed Bath & Beyond in Canada has so far been positive. 
Direct traffic to the site and conversions are both up, along with returns on ad spend for performance marketing, said Johnson. 
“The Canadian customer is eager to buy from Bed Bath & Beyond. They’re glad we’ve preserved the name. We expect the same in the U.S.,” said Johnson. 
With Overstock’s acquisition, the company acquired a customer base that’s about four times larger than its current base of about 4.6 million people. With that comes a fresh crop of customers that the company has data on, and can now market to. 

Leaning in to an old strategy

To gauge the success of the acquisition and rebrand over the next 12 months, Johnson said he will be laser-focused on significantly growing Overstock’s active customer base and their order frequency. 
To get there, he’ll be leaning in to a strategy that has proven successful for both Overstock and Bed Bath & Beyond in the past: attractive deals and coupons. 
To celebrate the launch, anyone who downloads and shops on the new app will receive a 25% off welcome coupon and those who are part of Overstock’s current loyalty program, Club O, will receive a 20% off coupon, the company said. 
Shoppers currently enrolled in Bed Bath & Beyond’s loyalty program will receive a reinstatement of up to $50 in unused loyalty reward points, exclusive coupons and free membership to the revamped Welcome Rewards program, which costs $19.95 a year. More

Merck reported second-quarter revenue that topped expectations on strong sales of its blockbuster cancer drug Keytruda and HPV vaccine Gardasil.
But the pharmaceutical giant posted a quarterly loss due to its acquisition of the biotech company Prometheus Biosciences earlier this year. 
Merck will hold a conference call with investors at 8 a.m. ET on Tuesday. 

Merck on Tuesday reported second-quarter revenue that topped expectations on strong sales of its blockbuster cancer drug Keytruda and HPV vaccine Gardasil.
The pharmaceutical giant posted a quarterly loss, however, due to charges associated with the company’s acquisition of Prometheus Biosciences earlier this year. 

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Merck swung to a net loss of $5.98 billion, or $2.35 per share, from a net income of $3.94 billion, or $1.55 per share, during the year-earlier period. Excluding acquisition and restructuring costs, Merck’s loss per share was $2.06 for the quarter. 
The loss reflects a $10.2 billion, or $4.02 per share, charge related to the company’s acquisition of Prometheus, which specializes in treatments for autoimmune diseases. Merck said it completed the deal in mid-June. 
Here’s how Merck results compared with Wall Street expectations, based on a survey of analysts by Refinitiv:

Loss per share: $2.06 adjusted vs. $2.18 expected
Revenue: $15.04 billion vs. $14.45 billion expected

Revenue of $15.04 billion for the quarter rose 3% from a year earlier. 
“What you really see…was long sustained underlying growth, and it was driven by oncology and vaccines, and the Gardasil franchise in vaccines,” Merck CEO Robert Davis said in an interview on CNBC’s “Squawk Box” on Tuesday.

Merck’s stock rose more than 1% in premarket trading. Shares of Merck are down roughly 4% this year, with a market value of roughly $270 billion, making it the third largest pharmaceutical company based in the U.S.

Medicine pill is seen with Merck logo displayed on a screen in the background in this illustration photo taken in Poland on October 4, 2021.
NurPhoto | NurPhoto | Getty Images

The New Jersey-based company raised its 2023 sales forecast to a range of $58.6 billion to $59.6 billion, slightly higher than the $57.7 billion to $58.9 billion guidance provided in late April. 
Merck lowered its full-year adjusted earnings outlook to $2.95 to $3.05 per share, from a previous forecast of $6.88 to $7 per share.
The company said its business growth during the quarter contributed 24 cents per share to the full-year earnings guidance, but was offset by the $4.02 per share charge related to the Prometheus deal.
The outlook also includes previously disclosed one-time charges related to Merck’s acquisition of Imago BioSciences last year and an upfront payment for a drug development agreement with Kelun-Biotech. 
“We see strong growth to the full year, and the guidance range you are referencing implies growth of 10% to 11% if you exclude the one-time impact,” Davis told CNBC. “It’s a strong beat.”

Strong pharmaceutical sales 

Merck’s pharmaceutical business, which develops a wide range of drugs for different disease areas, booked $13.46 billion in revenue during the quarter. That’s up 6% from the same period a year ago. 
Excluding Merck’s Covid antiviral treatment molnupiravir, the pharmaceutical division revenue grew 14%. 
Sales of molnupiravir, sold under the brand name Lagevrio, plunged to $203 million during the period, down 83% from the $1.18 billion reported for the second quarter of 2022. Analysts had been expecting the drug to rake in $187.6 million in sales, according to FactSet estimates.
The decline isn’t a surprise. Sales of molnupiravir and other Covid products from companies like Pfizer have plummeted this year as the world emerges from the pandemic and relies less on vaccines and treatments for protection. 
The pharmaceutical division’s growth was largely fueled by the popular antibody treatment Keytruda, which is used to treat several types of cancer.
The drug booked $6.27 billion in revenue, up 19% from the year-earlier quarter. Analysts had been expecting $5.97 billion in Keytruda sales, FactSet estimates said.
Davis said “that’s the first time we have been over $6 billion and a quarter” for Keytruda sales.
The company has been under pressure to reduce its dependence on Keytruda, which is slated to lose patent protection in 2028. But Merck is trying to defend its patent edge over Keytruda by developing new formulations of the drug, such as a version that can be injected under the skin.

Merck & Co. Keytruda cancer treatment drug.
Source: Merck & Co.

Merck’s pharmaceutical business also saw a jump in sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S.
Gardasil raked in $2.46 billion in sales, up 47% from the second quarter of 2022. Analysts had been expecting sales of $2.10 billion, according to FactSet estimates.
The company’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.46 billion in sales, off 1% from the same period a year ago.
Merck will hold a conference call at 8 a.m. ET on Tuesday. 
Investors are eager for updates on upcoming product launches and other drug pipeline updates that could cushion Keytruda’s patent cliff if they gain approval.
That includes Merck and Moderna’s experimental personalized cancer vaccine, which is being studied in combination with Ketyruda. The drugmakers launched a phase three trial of the vaccine last week. 
Other products include Merck’s experimental vaccine that aims to prevent invasive pneumococcal disease and pneumococcal pneumonia in adults. More

Walmart is pushing into in-store advertising to capitalize on its huge reach and chase growth in higher-margin businesses.
Walmart shoppers will soon see more third-party ads on screens in self-checkout lanes and TV aisles; hear spots over the store’s radio; and be able to sample items at demo stations.
Retailers have a unique opportunity to offer targeted ads, but have to be careful not to irritate or overwhelm shoppers.

Walmart is turning more parts of its stores into advertising opportunities. For example, brands can buy a spot on its self-checkout screens.

One of Walmart’s latest offerings at its SuperCenters isn’t a hot new toy, snack flavor or sundress. It’s advertising.
Shoppers will soon see more third-party ads on screens in Walmart self-checkout lanes and TV aisles; hear spots over the store’s radio; and be able to sample items at demo stations.

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Walmart’s push into advertising resembles similar moves by retailers like Kroger, which struck a deal to bring digital smart screens to cooler aisles in hundreds of its stores, and Target, which began testing in-store demos and giveaways, including a recent “Barbie” branded event with Mattel that took place at about 200 stores.
For Walmart, selling ad space to its wealth of existing partners is another way to capitalize on the company’s huge reach and to expand into higher-margin businesses. The discounter has nearly 4,700 stores across the U.S., with roughly 90% of Americans living within 10 miles of a Walmart store.
In the U.S., about 139 million customers visit Walmart stores and its website or app each week.
“When you think about our store, our store footprint and the the percentage of Americans that we reach through our stores, we can deliver Super Bowl-sized audiences every week,” said Ryan Mayward, senior vice president of retail media sales for Walmart Connect, the retailer’s advertising business.
The company plans to ramp up in-store ads using its approximately 170,000 digital screens across its locations as well as 30-second radio spots that will be available to suppliers later this year and can target a specific store or region.

And it’s hoping at least one of the new advertising initiatives will be easy to digest: Free samples in stores on the weekends.
Walmart plans to sell the sampling stations to advertisers and bundle them with other ad formats that can run at the same time to make for a fuller campaign. QR codes at the demo tables will pull up online shopping options, meal ideas or seasonal information.
It tried out the new in-house approach of selling sampling stations in Dallas-Fort Worth and plans to offer the option in over 1,000 stores across the country by end of January.
Advertising still drives a small sliver of Walmart’s overall revenue. Its global advertising business hit $2.7 billion in the most recent fiscal year, which ended in late January. That’s less than 1% of Walmart’s total annual revenue.
Yet it is becoming a more meaningful growth engine for Walmart. CEO Doug McMillon said earlier this year that he expects company profits to grow faster than sales over the next five years, driven in part by higher-margin businesses, including advertising.
In the most recent fiscal year, Walmart’s global ads business grew nearly 30% and its U.S. ads business, Walmart Connect, rose about 40%. That’s a sharper gain than the approximately 7% increase in Walmart’s total revenue and Walmart U.S. net sales during the period.

The next frontier

As Walmart and other retailers grow their ad businesses, the store stands as the next frontier. Target, Kroger and others have pushed aggressively into retail media, a buzzy term used to describe marketing to shoppers based on customer data.
That side hustle has become a more substantial revenue stream for retailers, especially as brands look for new ways to reach big audiences. Retail media is on track to be a $45 billion industry this year, up 20% from the prior year, according to Insider Intelligence. The market researcher expects that growth to accelerate in the coming years and reach about $106 billion in 2027.
Yet up until recently, retailers, including Walmart, have largely focused on selling online ads and steered clear of adding digital signs or flashier ads to the places that draw higher traffic and drive the vast majority of sales: Their own stores.
Walmart’s Mayward said the retailer has added advertising to stores “in a very deliberate and cautious way” after learning how shoppers respond to online ads.
When done right, he said ads can enhance the experience for shoppers and lift sales. For example, he said, a customer may spring for a sound bar after learning about the product on the TV wall when walking through the electronics department. They may decide to buy a jar of salsa after seeing a video of it near the aisle of their favorite bag of chips.
“It’s a complimentary advertising moment,” he said. “It’s helping you make connections between two different products and decide that you maybe need that second thing.”

Walmart is turning the approximately 170,000 digital screens across its U.S. stores into advertising opportunities. For example, a company that makes a snack or a beauty product can advertise in the TV aisle of the electronics department.

According to Mark Boidman, head of media at New York City-based investment bank Solomon Partners, that proximity offers a unique opportunity that online advertising can’t replicate.
“It’s better to reach people with video when you’re aisles apart as opposed to miles apart,” Boidman said.
He noted it’s gotten harder for brands to get in front of large audiences as customers increasingly fracture into smaller groups that watch different TV shows, subscribe to different streaming services or tune in to different broadcast channels.
Plus, he added, they want to more closely track if marketing dollars lead to sales. Grocers and big-box retailers have valuable first-party data that can better measure that, since they can advertise a product and then use a loyalty program or sales patterns to see if it became more popular.
But that additional data can be a double-edged sword. He said companies must respect shoppers’ privacy concerns, too. If an advertisement is too targeted to an individual, they may feel creeped out.

The right balance

With the debut of more in-store ads, retailers risk those privacy concerns as well as backlash from shoppers who may see the ads as unsightly or irritating.
That’s already played out at Walgreens: The drugstore added digital smart screens that flashed ads on fridge doors in many of its U.S. stores. Some shoppers complained on TikTok and Twitter that the doors made it hard to find ice cream, pizza or other frozen and chilled items they wanted.
Walgreens CEO Roz Brewer, who stepped into her role after the deal got signed, didn’t like them either, according to a lawsuit filed last month by Cooler Screens, the company behind the tech. It alleges Walgreens was in breach of contract after breaking off an installation agreement.
The drugstore chain had agreed to install the screens in at least 2,500 stores across the U.S., according to the lawsuit, but Brewer squashed the rollout after visiting the stores and comparing the screens “to ‘Vegas’ in a derogatory way.”
Walgreens disputed Cooler Screens’ claims and said it terminated its contract with the firm based on its “failure to perform.”

Cooler Screens has converted stores’ frozen and refrigerated aisles into places where companies can advertise.
Cooler Screens

In an interview with CNBC, Cooler Screens co-founder and CEO Arsen Avakian acknowledged that bringing ads into physical stores is tricky. But he said stores need a more modern look that allows shoppers to search, sort and discover merchandise like they do online and in apps.
Kroger plans to install Cooler Screens in 100 stores by end of year and reach 500 by next year. Walmart piloted Cooler Screens technology, but ultimately decided not to expand it.
Andrew Lipsman, a retail and e-commerce analyst for Insider Intelligence, said retailers have to tread lightly to avoid creating the real-world equivalent of pop-up ads.
“There’s a concern of it looking too much like Times Square,” said Lipsman, who previously worked for Cooler Screens and has closely followed retail media.
As retailers expand ads into stores, they can start with lower-risk spots like pharmacy or deli counters where customers may welcome a distraction as they wait, he said, adding that stores have plenty of subtle ads already. Brands pay for prominent spots at the end of aisles or for signs that spread the word about a seasonal snack, discount or new product.
And people have gotten used to seeing digital ads in other parts of the physical world, such as around the perimeter of major sports arenas.
“There’s digital signage everywhere,” Lipsman said. “It’s become pervasive across many contexts. It’s natural it’s going to enter the store.”
Disclosure: CNBC’s parent company, NBCUniversal, is a media partner of Walmart Connect. More