Retail media networks and fashion brands: opportunity or tax?

Retail media networks are both. For fashion brands, retailer advertising platforms deliver closed-loop attribution and access to purchase intent data that traditional digital channels cannot match. But the economics tell a different story: US advertisers spent 60.32 billion dollars on retail media in 2025 and will spend 71.09 billion dollars in 2026, yet median apparel operating margin sits at just 6.7 per cent after brands absorb customer acquisition costs, returns and now, retail media spend. The question is not whether to participate, but how to manage costs that are structural, rising and largely non-negotiable.

How big is retail media spending in 2026?

US advertisers spent 60.32 billion dollars on retail media in 2025 and will spend 71.09 billion dollars in 2026, according to a December 2025 eMarketer forecast. Globally, retail media is expected to grow to over 190 billion dollars in 2026. The channel is growing faster than search or social, yet concentration is extreme: eMarketer's November 2025 forecast sends 9.42 billion dollars of the 10.53 billion dollars in new 2026 US retail media spending to Amazon Ads and Walmart Connect, leaving hundreds of smaller networks fighting for the remainder.

Amazon accounted for more than 75 per cent of all US retail media ad spending in 2025, and Amazon will command 56.71 billion dollars in US retail media ad spending in 2026, with second-place Walmart at 5.99 billion dollars. For fashion brands selling through multiple retail channels, this concentration creates a structural dependency: the retailers who control distribution now also control the most effective advertising placements to reach shoppers on those same platforms.

Why are retailers building advertising businesses?

The margin opportunity is compelling. Traditional core retail margins hover precariously thin, often oscillating between 2 per cent and 5 per cent. By stark contrast, retail media advertising margins routinely exceed 60 per cent. More precisely, on-site retail media advertising margins often reach 70 to 80 per cent, while off-site margins are typically lower due to external media costs.

The impact on retailer profitability is measurable. US retail media will clear 69 billion dollars in 2026 at 70 to 90 per cent margins. At Walmart, advertising and membership already drive roughly a third of operating profit. This is not a side business; it is a structural shift in how retailers generate earnings, and it creates an incentive to expand ad inventory, raise pricing and increase the share of search results occupied by paid placements.

What does retail media cost fashion brands?

Media spend is only the starting point. A detailed cost breakdown shows that ad spend represents 43 to 68 per cent of total cost of ownership in the first year, and 48 to 75 per cent in ongoing annual costs. Beyond the media budget itself, brands face platform fees, creative production, data integration, attribution tooling and incremental headcount.

The full picture includes:

• Platform fees of 5 to 15 per cent of spend, totalling 30,000 to 90,000 dollars annually on a 600,000 dollar media budget
• Creative production costs of 30,000 to 100,000 dollars annually for refreshes across multiple networks
• Data integration tooling of 30,000 to 200,000 dollars annually
• Incremental headcount of 60,000 to 240,000 dollars for operations and analytics

Total cost of ownership, excluding ad spend, ranges from 205,000 to 650,000 dollars annually. For a fashion brand with median operating margin of 6.7 per cent, this overhead materially affects profitability, particularly when spread across the growing number of platforms brands are expected to manage.

How many retail media networks do brands use?

Platform fragmentation is accelerating. Brands now typically work with 4 to 6 retail media networks, and Skai projects the average to reach 11 by end of 2026. Each network operates as a walled garden: every retail media network is essentially a walled garden. Brands now typically work with 4 to 6 RMNs, and each has its own interface, API, metrics, minimum spend requirements and reporting standards.

The operational challenge compounds at scale. Fashion brands selling through Amazon, Walmart, Target, Macy's, Zalando and other retailers must build creative, manage bids, reconcile attribution and optimise performance separately on each platform. There is no universal dashboard, no standard cost-per-click benchmark and no shared taxonomy. Integration costs rise with each additional network, and brands lack the negotiating leverage to push for interoperability.

Do retail media networks deliver better performance?

Return on ad spend varies by category and network, but retail media generally outperforms traditional digital channels. Kantar notes that retail media platforms deliver 1.8 times the performance of classic digital advertising. For fashion specifically, median return on ad spend on Macy's Media Network was 3.3 times, with an interquartile range of 2.2 times to 5.1 times, based on fourth-quarter 2025 data.

Cost structure matters. Fashion and apparel cost per click ranges from 0.85 to 0.95 dollars on Amazon, lower than categories like consumer electronics but higher than books and media. The advantage of retail media is not necessarily cheaper clicks; it is attribution. Brands can measure which ad placements drove actual purchases on the retailer's platform, closing the loop between spend and sales in a way that display or social advertising cannot.

That closed-loop measurement is valuable, but it comes with a trade-off: brands are measuring performance only within the retailer's ecosystem, and the retailer controls the data, the auction mechanics and the pricing. As retail media spend grows, brands have less ability to independently verify incrementality or compare true cost per acquisition across channels.

What should fashion brands do?

Retail media is structural, not optional. Brands that do not participate on the platforms where they sell risk losing visibility to competitors who do. But participation does not require unlimited budgets or presence on every available network. Three priorities emerge from the economics:

• Prioritise by sales concentration. If 70 per cent of your digital wholesale revenue comes from two retailers, start there. The long tail of smaller networks may not justify the creative production and integration costs.
• Model total cost of ownership, not media spend. A 50,000 dollar monthly media budget on a new platform triggers 15,000 to 30,000 dollars in associated costs. Factor those into return on investment calculations before launch.
• Negotiate where possible. While minimum spend requirements and platform fees are often fixed, creative production, reporting access and data integration terms are sometimes negotiable, particularly for brands with significant sales volume on the retailer's platform.

The broader question is strategic. Fashion brands with median gross margins of 55.3 per cent and operating margins of 6.7 per cent are absorbing retail media costs at the same time they face rising customer acquisition costs on Meta and Google, higher return rates and, in 2026, increased tariffs. Retail media networks are not optional, but the current trajectory, where brands are expected to manage 11 platforms by year-end, is not sustainable without material increases in marketing efficiency or retail pricing.

The opportunity is real: closed-loop attribution, first-party shopper data and point-of-purchase placements deliver measurable sales lift. The tax is also real: platform fees, creative costs, integration expenses and the operational overhead of managing fragmented, proprietary systems. For most fashion brands, retail media networks are both, and managing the balance is now a core competency.

Researched and drafted with AI support, reviewed and released by the editorial team.

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