Market Navigator: US Department Stores—Softness Ahead Despite Opportunities in Experiences and Alternative Models

Published – October 2023

Each Market Navigator report offers an in-depth, data-rich view of a retail, consumer or technology sector and is packed with data on sectors, segments, companies and consumers. Our analysts discuss at greater length the sector themes they are observing and the insights they are forming on their markets. We intend these definitive guides to serve as points of reference to those in the retail ecosystem, guiding readers’ strategic decision-making and assisting them in tapping opportunities and navigating disruption in retail and adjacent industries. 

In this Market Navigator report, Coresight Research explores the US department store sector in the post-pandemic retail environment. We provide the size and trajectory of US department stores for 2023 and beyond, as well as critical factors impacting sector growth. We also discuss e-commerce penetration, distribution channels, the competitive landscape, key themes and innovators, and blue-sky thinking for US department stores. 

Data in this research report include: 

• US department store sector size and year-over-year growth rates for 2018–2027E 
• Segment breakdowns for 2018–2027E for the US department store sector 
• Total US department store sector online sales and e-commerce year-over-year growth rates for 2018–2027E 
• Leading retailers in the US department store sector ranked by 2022 revenue and total operating margins for 2018–2022 
• Proprietary survey data on how often US consumers shop at department stores and what products they purchase from department stores 

Introduction 

What We Think 

• Structural Challenges Will Continue 
• A Focus on the Right Product Trends Is Needed To Win 
• Inflation Could Impact Discretionary Spending 
• Responsiveness, Inclusivity and Social Responsibility Remain Important 
• Innovative, Tech-Enabled Experiences Pave the Way 

Blue-Sky Thinking 

• Industry Concentration 
• Department Store Strategies Toward Changing Demographics 
• The Inclusion of Grocery Departments 
• Expansion into Alternative Businesses 

• Generative AI 

The US Department Stores Sector 

• Market Scale and Opportunity 
• Segment Breakdown 
• Online Market 
• Market Factors 
• Real GDP Growth 

The Companies 

• Competitive Landscape 
• Store Numbers and Changes 
• Store Traffic 

Survey Analysis: Which Department Stores US Consumers Are Shopping From and What Are They Buying 

Themes We Are Watching 

• Responsive 
• Engaging 
• Socially Responsible 
• Expansive 
• Tech-Enabled 

Macro Context 

• Unemployment and Wages 

• Real Disposable Income Per Capita 
• Savings Rate 
• Interest Rates and the Housing Market 
• Gasoline Prices 
• Consumer Spending 

Retail Innovators 

• Adeptmind 
• Bolt 
• Persado 

Notes 

Methodology 

Appendix: Company Profiles 

• Kohl’s Corporation (NYSE: KSS) 
• Macy’s, Inc. (NYSE: M) 
• Nordstrom Inc. (NYSE: JWN) 

Appendix: About the Coresight Research RESET Framework 

Appendix: About the Coresight Research EnCORE Framework 

57-page PDF report

Companies mentioned in this report include: Belk (OBB: BLKIB), Bergdorf Goodman, Century 21 (HN: C21), Dillard’s (NYSE: DDS), JCPenney (NYSE: JCP), Kohl’s (NYSE: KSS), Macy’s (NYSE: M), Neiman Marcus (NYSE: MCS), Nordstrom (NYSE: JWN), Saks Fifth Avenue (NYSE: SKS), Sephora (LVMH Moët Hennessy – Louis Vuitton; ENXTPA: MC), Toys “R” Us, Ulta Beauty (NASDAQ: ULTA) 

1. US Department Store Sector Size (Left Axis; USD Bil.) and YoY Change (Right Axis; %) 
2. A Timeline of Notable Department Stores That Filed for Bankruptcy or Underwent Significant Ownership Changes (Since 1990) 
3. US Single-Person Households and Population Aged 65+ (Millions) 
4. US Department Store Sector Size (Left Axis; USD Bil.) and YoY Change (Right Axis; %) 
5. US Department Store Sector: Segment Breakdowns (% of Total Sales, Top; Total Revenue in USD Bil., Bottom) 
6. US Department Stores Online Sector Sales (Left Axis; USD Bil.) and YoY Change (Right Axis; %) 
7. US Department Stores E-Commerce Penetration (Online Sector Sales as % of Total Sales) 
8. Department Stores and Nonstore Retailers: Share of Total US Retail Sales (%) 
9. US: Consumer Price Index by Selected Expenditure Category, YoY % Changes (Unadjusted) 
10. Respondents Who Have Observed Inflation: How They Have Changed, or Expect To Change, Their Shopping Habits in Nongrocery as a Result (% of Respondents) 
11. US: Real GDP YoY Growth (%) 
12. US Major Department Stores’ Revenues, Ranked by 2022 Revenue (USD Bil.) 
13. Key Comparable Metrics of Selected US Department Stores (Ordered Alphabetically) 
14. Total Operating Margins of Selected Department Stores (%) 
15. US: Selected Department Stores’ Store Numbers, Ranked by Number of Stores (As of June 13, 2023) 
16. US Major Department Stores’ Store Traffic, 2023: YoY % Change (Ordered by May 2023 Traffic Growth) 
17. US Consumers: Whether They Purchased From Department Stores in the Past Three Months Ended July 17, 2023 (Left, % of Respondents) and How Much They Spent (Right, % of Respondents) 
18. US Department Store Shoppers: Department Stores from Which They Have Shopped Ended July 17, 2023 (% of Respondents) 
19. A Comparison of Department Stores from Which Consumers Have Shopped In The Past Four Quarters (% of Respondents) 
20. US Department Store Shoppers: Product Categories from Which They Have Shopped In The Past Three Months Ended July 17, 2023 (% of Respondents) 
21. A Comparison of Product Categories from Which Department Store Shoppers Have Purchased In The Past Four Quarters (% of Respondents) 
22. Monthly Visits to Market by Macy’s Snellville, Georgia (Left) and Flower Mound, Texas (Right) Compared to Macy’s Locations in Selected Months of 2022 (MoM % Change) 
23. Selected US Department Stores’ Private-Label Offerings 
24. The EnCORE Framework 
25. US Retail Media Advertising Revenue (USD Bil.) 
26. US Unemployment Rate (Left Axis; %) and US Average Hourly Wages (Right Axis; %) 
27. US Annualized Real Disposable Income Per Capita (Left Axis; USD) and YoY % Change (Right Axis) 
28. Personal Saving Rate (Left Axis; %) and YoY Change (Right Axis; PPTs) 
29. New Housing Starts (Left Axis) and Case-Shiller Home Price Index (Right Axis) 
30. US Regular All Formulations Gas Price (Left Axis; USD per Gallon)* and University of Michigan Consumer Sentiment Index (Right Axis) 
31. US Real and Nominal Consumer Spending Growth (YoY % Change)