Brands Briefing: As AI reshapes retail, brands are investing even more in stores

It’s an important lesson: At a time when it’s possible to get an item delivered to your door within the hour — or even have a bot order for you — customers still want to touch, feel and try on merchandise, executives say. But shoppers don’t want stores to feel completely transactional, either. Experiential retail has become more popular since Covid, with players such as Quince and Lululemon leaning into pop-ups or pilates classes. And Gen Z and Gen Alpha are using stores to connect with friends and get away from screens.

Many brands, eager for market share and awareness, are now doubling down on store expansion plans. Cotopaxi plans to double its store count from 20 to 40 locations over the next three years. In May, Brunt opened its first retail store in its backyard of Massachusetts. Fabletics is using its growing store footprint to power its membership program. And 2025 was the first time in 18 years that Pacsun increased its store count, rather than decreased it.

The importance of having a physical retail presence is apparent even to brands that started online, like performance apparel brand Rhone. “As we’re surrounded by all this AI tech, in-person still matters,” CEO Nate Checketts said at Shoptalk Fall in Nashville this month. “If we wanted to build a strong brand, then we needed to be able to connect with the customer in person.”

That’s not to say that there isn’t a place for technology in stores. Walmart executives are training store associates to use AI, including when scheduling store shifts. Anthropologie uses AI applications to more quickly allocate merchandise to each store. And Kohl’s is seeing a rise in the number of people who buy items online and then pick them up in store.

At the same time, having a strong e-commerce presence doesn’t guarantee success in physical retail, Checketts said. “I always use the example, ‘If you can play soccer, can you do ballet?'” he asked. “Because that’s about the equivalent [with e-commerce and brick-and-mortar retail]. It’s so different in the way you think about approaching it.”

Below, learn some ways that brands and retailers are fine-tuning their stores for the future, as described at Shoptalk Fall and in interviews with Modern Retail.

Localize merchandise

Anthropologie expects to reach 270 global stores across its brands by the end of the year. Anthropologie sets up new stores based on a variety of metrics, including e-commerce sales and emerging populations, and aims for breadth of product, said Mindy Massey, Anthropologie’s executive director of stores.

“We used to tackle [merchandise] on a store-by-store basis, but I would say, in the last five to 10 years, we’ve really looked at it on a market basis,” she said. “We want to make sure that the customer that lives within a market, or [within] driving distance to a market, can experience all the brands we have to offer.”

Because some of Anthropologie’s stores exist in the same city, the company also tailors its assortment to the surrounding community. Anthropologie’s store in Nashville’s Gulch neighborhood, for instance, is smaller and has apparel, accessories and jewelry, rather than home goods. “We set that store up, specifically, to speak to and service our customer who is typically a tourist, or is perhaps in Nashville with a group of gals shopping; maybe it’s a bachelorette party,” said Candan Erenguc, Anthropologie’s chief operating officer.

On the other hand, Anthropologie’s store in Franklin, Tennessee is four times the size of the Gulch store. It has a wedding salon, a shoe salon and live plants. Another upcoming Nashville store will have a much larger denim presence.

“Nashville is a really great representation of how we think about a market and how we select where to put stores within a market, and then how we size those stores and assort them,” Erenguc said.

Encourage integration with e-commerce

Physical retail is key at Kohl’s, as more than 80% of Americans live within 15 miles of a Kohl’s store, said Arianne Parisi, Kohl’s chief customer officer. Kohl’s has more than 60 million customers, and the majority of its demand “is actually fulfilled from stores, in some way,” Parisi said.

More than 20% of the time, customers are coming into a store to pick up an order they placed online. That number is rapidly growing, Parisi said. But “it’s not because we are conditioning human behavior,” she said. “We’re just following their intent, and so, part of transforming the digital experience has been to recognize this as an advantage and a leverage point, and make it easier.”

At the same time, 25% of customers who come into a Kohl’s location buy something else, too. To encourage this behavior, Kohl’s is taking a careful look at its store flow and the assortment it carries in any given store. For instance, it recently revisited its private brands to make them easier to shop and keep in stock.

Anthropologie, which also offers buy-online, pick-up in-store capabilities, finds that there isn’t cannibalization between e-commerce and stores, Erenguc said. “What we’ve found is that the better our presence in the market, the more that market grows across all channels and all stores,” she said. “The conversation around digital versus physical retail is one that we’ve been having for a long time, and it’s not an ‘or’; it’s very much an ‘and.'”

Collect real-time feedback

Brunt sells boots and apparel for people working in the skilled trades. When it opened its flagship store in North Reading earlier this year, the brand took plenty of design cues from construction jobsites. While Brunt sells online and also via wholesalers, it’s using its store to have one-on-one conversations with customers. Now, several times a month, its customer insights team and products team come to Brunt’s Massachusetts store with prototypes and ask customers to duck into the “Think Tank,” a secret room hidden behind what looks like a door to a port-a-potty.

“We’ll just talk to customers [and ask], ‘What do you wear? What jobs do you do? Do you like this concept? What would you do to make this boot better?'” Christopher Pond, Brunt’s chief growth officer, said. “We think about that physical connection and presence as something that can help us be better at continuing to make great products for trades folks that need it, but also create an engaging experience that’s more than just ‘pick up a boot.'”

Rhone, for its part, has 25 stores across the country, as well as retail partners like Nordstrom. Each week, its store managers get on the phone with the merchandising team and share what they’ve heard from customers. Checketts said that the brand is able to get customer feedback much faster in stores than online. “If you think about it, a customer [buying on your site] hasn’t interacted with the product,” he said. “They purchase it, they get it a few days later, they interact with it and maybe you hear from them.”

Meanwhile, he added, “The in-person feedback loop is that somebody walks into the store, they walk in the dressing room, they touch a fabric, they see a product and they talk to the store team.” At the same time, Checketts said it’s important to build consensus around customer feedback. A store team needs to “aggregate the most important data” and then find ways to act on it, he said.

Interact with the community

Crocs, which has hundreds of owned stores worldwide and various retail partners, holds pop-ups and customization stations for Jibbitz lovers in its stores. For Crocs, with stores, “personalization is really at the center,” President Anne Mehlman said. Associates and stylists often help customers pick out charms and accessories. “Some [people] will spend 45 minutes in our store, just thinking through how they’re going to create something that’s uniquely theirs,” Mehlman said.

Meanwhile, community events are a mainstay at Rhone, Checketts said. By the end of 2026, the brand will have held almost 500 events across its store fleet, focusing on a concept it calls the “12 Pursuits.” The program divides the 12-month calendar into 12 themes like “Sleep,” “Breathwork” and “Hydration.” In the past, this program was internal, for employees. Now, Rhone is making it customer-facing, for the first time.

On Oct. 14, for instance, Rhone will host pickup basketball and a DJ set in New York City, as part of the month’s theme of “Play.” The program “gives you a reason to go back [to our store], whether or not you’re buying a piece of clothing,” Checketts said. “We view our stores as [places for] community interactions. That’s really changed the way we design them and the way we train our team.”

What I’m reading

• Starbucks is working with advisers on a possible Chipotle takeover plan. (The Financial Times)
• In a management shakeup, Lululemon appointed Athleta‘s CEO as its new president and chief product officer. (Bloomberg)
• Constellation Brands, the owner of Modelo, is looking to events and ready-to-drink cocktails to counteract slower spending. (CNBC)

What we’ve covered

• Shapermint is on track to hit $10M in TikTok Shop sales by targeting women ages 35-65.
• ‘Plastic-free’ is the new battleground in coffee makers for brands like Keurig and Lavazza.
• Crocs is embracing more ‘elevated’ accessories such as shoe tattoos and ballet ribbons.