Department stores in the United States have been in crisis for several years, with industry revenue seeing a near constant and dramatic fall since the early 2000s accompanied by significant store closures. Even Macy’s, the world’s leading department store according to some metrics, announced that they would be closing 150 stores in 2024.
Despite total retail sales in the United States hitting their highest ever figure in 2023,
sales in U.S. department stores fell to 132.7 billion U.S. dollars, a record low since 1992, with the exception of 2020, when stores were closed for a large part of the year.
Individual companies struggle
Macy’s had the highest
net sales of any department store in the United States in financial year 2023, at 23 billion dollars, but by their own standards, this represented the lowest total since 2005 (again excepting 2020). It was a similar story at Kohl’s, with the lowest sales in years, and, although the drop wasn’t so dramatic at
Nordstrom and Dillard’s, neither managed to produce any growth.
Consumer popularity
Big-box and discount stores dominated the rankings of the
most popular general merchandise stores in the United States in 2023, but of the department stores, there was nothing to separate Macy’s and Kohl’s which were each liked by almost two-thirds of respondents. In a separate survey on
consumer satisfaction in 2024, Macy’s again topped the ranking. Belk and Kohl’s followed as the next highest ranked department stores.
Department stores look forward to the holidays
One area in which department stores do perform strongly is holiday sales. In 2023, department stores were the physical retail destination where most
holiday shoppers planned to make purchases. This could be thanks to the wide selection of products, giving consumers the opportunity to buy decorations and presents of all types in one convenient trip. It is not just Christmas that brings consumers to department stores, Valentine’s Day and
back-to-school shopping also bring customers through the doors.
What to do?
Department store retailers will be trying to implement strategies to halt the deterioration that has been haunting department stores over the last decade. Reducing store numbers to increase efficiency is a common tactic. Creating a seamless omnichannel strategy is also vital to success.
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