Brands refocus on physical retail as AI disrupts digital customer acquisition
Fashion and beauty brands are leaning on stores, events and human service as AI continues to reshape their digital marketing playbooks.
During a recent Brand Leaders dinner hosted by Glossy and Modern Retail in partnership with Global Payments, retail founders and executives gathered to discuss the most pressing issues their respective companies face.
The executives represented brands across fashion and beauty and spoke about integrating physical retail into their existing businesses, which is proving important as digital advertising continues to upend e-commerce. The discussion was held under Chatham House Rules, giving attendees anonymity to speak candidly on behalf of their companies.
Undoubtedly, one of the biggest topics of conversation was AI’s impact on the customer journey in 2026. Many of these fashion executives are already coming off of a few challenging years. “Covid almost destroyed my business, and then we managed to make it to the other end just to be hit with tariffs,” said one women’s fashion brand founder.
Another fashion brand executive said that while her business is growing fast, her biggest challenge is scaling and tapping the right resources and support as it expands across multiple distribution channels. “This is what keeps me up at night,” she said.
What’s more, as these executives navigate macroeconomic challenges, they’re also tasked with finding new ways to acquire and keep customers.
One in-house marketer said his company’s current challenge is that the tools it has used for years to attract customers are becoming less effective. “We typically rely on things like search engine [ads], display,” he said. But now, he said, “it’s very difficult to advertise on those channels” due to people increasingly using language models and AI for product discovery. Unfortunately for marketing, it’s become kind of a Wild West, he said. “So we’re starting to rely on in-person and personal connections again to diversify our marketing mix,” he said.
One apparel brand co-founder agreed that many brands are dealing with this problem. “We’d like to build a relationship with our customers and everything, so we just started throwing parties because we have a big space,” said the apparel brand co-founder.
She added that while some events can lose money, consistency can pay off in the long run. One concept that worked was customer-driven, where the brand invited clients and their friends. Another was a shopping event where a percentage of proceeds went to a charity.
One executive at a kids’ fashion brand said in-person events don’t always have to be complicated. The company currently operates a handful of stores. “It is such a great atmosphere, and we really want to bring that to more people but still maintain what’s special about it,” she said.
For its customers specifically, the brand keeps things simple with family-friendly store events that often include playtime and face painting. “We find that we don’t really have to reinvent the wheel when it comes to what kids and families want,” she said.
A fashion brand founder with multiple brick-and-mortar stores said that, because there is so much technology across the shopping journey these days, “I feel like our customer is looking for a human.”
“They want to touch, they want to feel, and they want to get to know everything,” she said. That’s why there’s an increased focus on helping customers get to know the teams running the stores. “So that’s really inspiring.”
But building out owned storefronts is no easy task, with rising operational costs in prime locations like New York City and Los Angeles.
Another clothing brand co-founder said that this is especially true after more than a decade of relying on wholesale retail for growth. “About 40% of our business is really done with wholesalers,” she said. “We’re building out the e-commerce part and the brick-and-mortar.”
One of her company’s biggest challenges is “figuring out why people come in instead of shopping online.” The company wants to know what works before opening more locations across the country.
The same is even more true for younger startup brands, according to one founder who just launched a jewelry brand and chose to start with a New York store.
He said the biggest challenge as a newly launched brand diving into physical retail is being profitable without the founders putting in 12-hour shifts. “I’m very much in the grind stage, and it’s been a lot of work,” he said. “The hardest thing is finding the right people to trust to run things.”
Thus far, the company has had a rotating door of sales associates. “So, we’re figuring that out, but it’s really competitive,” he added.