Retail and apparel companies worldwide are adapting to an environment in which drawing new consumers is becoming progressively more expensive. Analysts at Deutsche Bank highlight a sector-wide trend toward higher customer-acquisition costs, a development expected to shape corporate strategy discussions for the rest of 2026.
Companies are attempting to balance the need to keep top-line growth on track against the realities of a volatile consumer backdrop. The result, according to industry observers, is either an across-the-board increase in marketing budgets or a targeted reallocation of resources to defend and grow market share.
Pressure on household budgets and the fight for spending
Retailers are operating in a complicated macroeconomic setting. Elevated energy prices are weighing on household finances, which tightens discretionary spending and heightens competition among brands for each dollar of consumer expenditure. After fourth-quarter earnings, several companies redirected focus to reinvesting in brand loyalty - a move aimed at long-term health but one that can reduce near-term profit margins.
Deutsche Bank identifies three central forces driving current marketing behavior in the sector:
- Market leaders are increasing investment to protect their dominant positions.
- Underperforming brands are stepping up marketing to restore relevance.
- Value-oriented retailers are intensifying campaigns to hold onto cost-conscious consumers.
These dynamics have direct implications for shareholders. Firms that have already upgraded marketing infrastructure and capabilities are seen as poised to capture incremental share as acquisition costs rise. In contrast, companies that have not historically invested sufficiently - or that are only now moving to increase spend - may incur margin compression while attempting to compete in a more expensive digital advertising ecosystem.
Winners and losers as acquisition costs rise
While rising acquisition costs are a headwind across the sector, outcomes will diverge. Deutsche Bank flags several names as likely beneficiaries of a higher industry-wide allocation to marketing, including Birkenstock (BIRK), Burlington (BURL), and Ross Stores (ROST). These companies are identified as being well-placed to take advantage of the shift in spend.
Conversely, larger chains and premium incumbents such as Bath & Body Works (BBWI), Lululemon (LULU), Nike (NKE), and Ulta Beauty (ULTA) are expected to face pressure to increase marketing outlays in order to preserve their competitive positions. The need to raise marketing investment could weigh on margins for these heavyweights.
Deutsche Bank also highlights a subset of retailers considered best positioned for upside amid these trends: American Eagle Outfitters (AS), Five Below (FIVE), Ralph Lauren (RL), and TJX Companies (TJX). These firms are cited as having already begun shifting toward proactive, data-driven marketing investments, giving them agility even as the cost of gaining consumer attention continues to climb.
Investor considerations
For investors, the marketing-spend cycle introduces a potential divergence in performance within the retail and apparel complex. Companies that financed upgrades to marketing and analytics capabilities may see an opportunity to expand share. Those needing to accelerate spend to remain competitive face the risk of near-term margin degradation. The competitive environment, particularly in digital advertising channels where costs are rising, is likely to remain a central factor in performance assessments.
Given the pressures on household budgets and the sectoral shift in marketing intensity, investors should watch companies' stated marketing priorities and the degree to which they have already invested in data-driven customer acquisition capabilities.