Five major retail brands — Rhone, Anthropologie, Kohl's, Brunt, and Crocs — report increased capital investment in physical stores heading into 2027, according to Modern Retail's Brands Briefing. The move coincides with AI-driven reductions in back-end planning costs, allowing brands to reallocate dollars from merchandising labor and inventory waste into square footage and customer experience.
The mechanism is simple: AI tools now handle demand forecasting, assortment planning, and replenishment scheduling that once required large merchandising teams. Brands capture those savings and redirect them to new store builds, renovations, and in-store experience upgrades. Rhone, a men's activewear brand, and Brunt, a work boot company, both cited store expansion as a strategic priority. Anthropologie and Kohl's, with mature store fleets, are renovating existing locations. Crocs continues opening new doors despite its robust digital business.
Why this works: Physical stores remain the highest-converting channel for most product categories. Apparel and footwear conversion rates in-store run three to five times higher than e-commerce, per industry benchmarks. The cost barrier has always been the operational overhead — inventory precision, labor scheduling, visual merchandising. AI collapses those costs. A brand that spent $500,000 annually on demand planners and excess stock can now run leaner systems and deploy that capital into a store lease, fixtures, and staff.
The second driver is retail media. A separate IAB and Grocery TV study released this week found that marketers increasingly view in-store retail media as a full-funnel channel, though 43 percent say they underutilize it. Brands that own their own stores control the media inventory. They can test promotions, capture first-party purchase data, and iterate without waiting on a retailer partner. The store becomes both a conversion point and a data collection node.
The steal for a small physical-product brand: You cannot afford a retail lease, but you can afford a roadshow. Rent a pop-up space in a high-foot-traffic area for a weekend or a week. Use a lightweight AI demand tool — platforms like Inventory Planner or Cogsy start under $200 per month — to model which SKUs to bring and in what quantities. This minimizes dead stock risk. Bring 10 to 15 units per SKU, not 50. Staff the pop-up yourself or with one hire. Capture emails at checkout with a simple iPad form or Square terminal integration. Track conversion by hour and day of week.
After the pop-up, send a post-purchase email sequence to everyone who bought. Include a product photo, a reorder link, and a referral incentive. Use the foot traffic data and conversion rate to model a longer lease or a second market. If your pop-up converts at 8 percent and you see 200 visitors per day, that is 16 transactions. At a $40 average order, you generate $640 daily revenue. A week-long pop-up with a $1,500 rent and $500 in labor costs $2,000. You clear $4,480 in revenue, leaving $2,480 in gross margin before product cost. Run this in three cities over a quarter, refine your SKU mix each time, and you have a repeatable playbook and a customer file.
The broader pattern: Brick-and-mortar is not dying. It is becoming cheaper to operate and more valuable as a data and conversion channel. The brands that survived the digital shift are the ones now expanding physical presence. Small brands can run the same play at micro scale, using pop-ups and AI inventory tools to test markets without signing multi-year leases. The next move is to treat each pop-up as a product launch, capture the customer data, and build a repeat-purchase file before you ever commit to a permanent location.
Use AI demand tools to minimize pop-up inventory risk, capture emails, and test store economics before signing a lease.
Editorial & Disclosure Notice: This article was written with artificial intelligence from public sources and is published without individual human review. Artificial intelligence and other digital tools are also used for research, analysis, editing, formatting, and production. Errors, omissions, outdated information, or inaccuracies may occur. References to companies, brands, products, services, organizations, or individuals are for informational and editorial purposes and do not imply endorsement, sponsorship, affiliation, partnership, or approval unless expressly stated. All trademarks and other intellectual property remain the property of their respective owners. Opinions, analysis, estimates, and commentary are informational only and should not be construed as financial, investment, legal, tax, medical, procurement, or other professional advice. Information may be corrected, clarified, or updated after publication. Corrections or removal requests: jenny@pops4.com.
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