Fashion and beauty brands are shifting marketing budgets toward physical stores, in-person events, and human service teams as AI-powered search erodes the effectiveness of traditional digital advertising. Executives gathered at a recent Brand Leaders dinner hosted by Glossy and Modern Retail in partnership with Global Payments described a scramble to diversify customer acquisition channels after years of relying on search engine ads and display campaigns.
One in-house marketer said the tools his company has used for years are losing traction. "We typically rely on things like search engine [ads], display," he said. But now, "it's very difficult to advertise on those channels" because consumers increasingly use language models and AI for product discovery. He called the current marketing environment "kind of a Wild West" and said the company is "starting to rely on in-person and personal connections again to diversify our marketing mix."
The pivot to owned physical experiences
Several executives described a deliberate turn toward storefronts and live events as digital costs rise and returns diminish. One apparel brand co-founder said her team began hosting parties in their retail space to build direct customer relationships. While some events lose money in the short term, she said consistency pays off. A customer-driven format where clients brought friends performed well, as did a charity shopping event that donated a percentage of proceeds.
A kids' fashion brand executive keeps store events deliberately simple - playtime and face painting - to draw families in. "We find that we don't really have to reinvent the wheel when it comes to what kids and families want," she said. The brand operates a handful of locations and wants to expand without losing the atmosphere that makes the stores work.
A fashion brand founder with multiple brick-and-mortar locations put the shift in starker terms. "I feel like our customer is looking for a human," she said. "They want to touch, they want to feel, and they want to get to know everything." Her team now emphasizes helping shoppers connect with the people running the stores.
The cost and talent pressures of physical retail
Building owned storefronts comes with steep operational costs, particularly in New York City and Los Angeles. One clothing brand co-founder said this is a new challenge after more than a decade of relying on wholesale partners for roughly 40% of revenue. The company is now building out both e-commerce and brick-and-mortar channels simultaneously. Her biggest question: "figuring out why people come in instead of shopping online" before committing to more locations.
For younger startups, the grind is even more intense. A jewelry brand founder who launched with a New York store said profitability without founders working 12-hour shifts remains elusive. "The hardest thing is finding the right people to trust to run things," he said. The store has cycled through sales associates, and he described the hiring market as "really competitive."
Why this matters for marketing professionals
The experiences shared at the dinner point to a structural shift in customer acquisition strategy. As AI fragments the search-driven funnel that digital marketing teams built their playbooks around, physical retail and live events are moving from brand-building nice-to-haves into measurable acquisition channels. For marketers, this means reallocating budgets, developing in-store experience design skills, and building attribution models that connect physical touchpoints to revenue. Marketers who wait for digital ad platforms to regain their old efficiency risk losing ground to competitors already investing in owned physical relationships. Developing skills in AI for Marketing can help teams adapt, and an AI Learning Path for Marketing Managers offers structured training on campaign optimization in a shifting digital environment.
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