Retail CMOs Defend Brand Investment With The Economics Of The Second Purchase

Retail marketing budgets are being squeezed from both sides. Operating costs keep rising while shoppers stay under pressure and hunt for value, which leaves marketing leaders with strong incentives to favor the channels that can prove their return quickly. AI-assisted search and paid discovery make that pull especially strong because their returns are easy to see. The more effectively they capture existing demand, the harder it can become to justify spending on creating future demand.

Tim Fairs is a Senior Consultant at SG-retail, a UK consultancy that helps retailers design loyalty programs and build retail media networks. He has spent much of his career as a CMO driving growth across retail and ecommerce, including a spell at cookware brand ProCook, a business he describes as excellent and almost completely unknown at the time. His current work is in loyalty and retail media, two areas built around understanding and monetizing existing customer relationships. Fairs says that kind of efficiency only pays off when the brand keeps spending on the work that made those customers want it in the first place.

"The risk of being obsessed with what gives you the best immediate return is that it won't build your brand over the long term," Fairs says.

The squeeze behind every spending decision

Fairs points to several pressures at once. "Retailers have had to face into higher national insurance costs, the national minimum wage going up, business rates being way out of date, and at the same time you've had customers impacted by inflation and the cost of living crisis," says Fairs. "You've got the perfect storm, which causes a lot of pressure for retailers to make decent profits, which then leads to store closures and consolidation, and it goes into a bit of a downward spiral." The British Retail Consortium has put a number on part of that, estimating an additional £6.5 billion in employment costs over a fourteen-month period from higher National Insurance contributions and the National Living Wage.

"It's not all gloom and doom," he says. "Some retailers are finding a way, and those are the ones that innovate, that are leveraging the full capability of AI, and that are putting the customer front and center." The retailers doing well, he says, keep asking what would make a customer pick them over the shop next door, then work out whether the answer is more footfall or a bigger basket.

Two kinds of availability

Ask Fairs what separates the retailers pulling ahead and he gives you two conditions, both of which have to be true. "If you look at the formula that makes successful retailers, they've got very good physical availability, so customers find it easy to access their products or their service, and they've got very good mental availability as well," he says. Physical availability means store estate, range, stock, and a purchase path online with the friction taken out. Mental availability means being the brand a shopper thinks of before they start looking. Only one of the two turns up readily in a weekly trading report, which can make the other harder to defend when margins tighten.

He thinks about when to spend as well as how much. "I have this expression, you fish where there are fish," says Fairs, arguing for heavier investment in the seasons when demand runs highest and less through the quiet months.

The two showed up together on a recent shopping trip. "All these fridges were out because it's been hot here in the UK, so there was hardly anything to buy," he says of a trip to his local M&S, which sits next door to a Sainsbury's. "I just walked next door into Sainsbury's, and the risk of that is I've now had a really good experience at Sainsbury's." M&S has since committed significant capital to upgrading its refrigeration. The refrigeration upgrade looks like an operations decision, but what M&S is protecting is the customer's preference for its stores. One bad trip was enough to send a loyal shopper into a competitor's store and give that competitor a chance to keep him.

Cost of being forgotten

Shoppers now turn up having done most of the evaluation somewhere else. "They certainly come more informed," says Fairs. "Most customers will do their research online, and if you haven't got a good online presence through leveraging AI and all the rest of it, then you risk losing out to your competitors." The same technology can also cut operating costs and keep shelves stocked, so a shopper who does walk in finds what the research promised.

For marketing teams, that makes a strong online presence a basic requirement, and showing up accurately across the surfaces shoppers use is now part of the CMO's job. A shopper researching a brand carefully had some reason to be researching that brand, and nothing in the research stage supplies that reason.

Lifetime value is the argument finance will sit through

Fairs understands why finance leans the way it does. "If I'm a CFO, I'd probably think I'm just going to spend all my money on paid search and AI, because I know that's going to give me the biggest return, certainly in the short term," he says. His answer is to look at the same customer over a longer period. "I might want to invest a bit of money into cost per acquisition to get customers to try me once," says Fairs, "but if they've had a good experience they're likely to come back two, three, four times that year, so I'll get the money back that way."

He has little patience for channel-by-channel attribution, arguing that a mix of performance, brand, TV, press, paid, SEO, social, and CRM returns as a whole, and that "trying to be prescriptive about what each and every line is returning is probably not the way to go." Harvard Business Review has made a version of the same case, arguing that brand building and performance marketing get more useful to each other once companies build metrics linking both to financial outcomes. Marketers who have won this argument internally usually turn up with evidence, using holdout tests and longer windows to show what disappears when upper-funnel activity stops.

Loyalty data is what makes the longer view measurable. Fairs describes tracking "what everyone's buying, what their basket penetration is by brand, what categories they're buying into and what they're not," then personalizing offers against those gaps. That drives sales now while showing which customers are worth investing in later. Retail media sits on top of the same data, and Fairs argues that roughly 80% of purchasing decisions get made in store, which in his view leaves in-aisle advertising with very little wastage because the audience is already shopping. Both of those monetize demand a shopper already has, though, and a direct relationship through owned channels is what a retailer has to work with when that shopper is at home deciding where to go.

The case for protecting brand investment can be made with numbers finance already tracks by following what happens after the first transaction. "Retailers may focus on the things they know will give them the best return, but those things won't necessarily grow the business over the long term," says Fairs. The CMOs who get that budget approved tend to be the ones who arrive with the second purchase already costed.