Department Stores NAICS 455110

Mar 5, 2026 - Department Stores Weigh Tariff Relief Against New Import Levies

• The US department store industry faces continued tariff uncertainty despite the Supreme Court striking down tariffs imposed under the International Emergency Economic Powers Act (IEEPA), according to a report in Retail Dive. The ruling reduced the average effective US tariff rate from 16% to 9.1%, potentially lowering sourcing costs for retailers reliant on global supply chains. However, the administration quickly introduced new tariffs under Section 122, including a 10% surcharge on imports, with plans to raise it to 15% for up to 150 days, pushing the effective rate back to 13.7%. While the decision could allow retailers to seek tariff refunds, analysts say reimbursements are uncertain and likely delayed by litigation. For department stores, categories such as furniture, footwear, sporting goods, and toys, key merchandise segments, were among the most negatively affected by prior tariffs and could benefit most from reductions. Overall, the ruling improves trade predictability but maintains cost volatility for retailers managing global sourcing and pricing strategies.
• US consumer sentiment showed modest stabilization in February, offering mixed signals for the department store industry, according to recent indicators. The Conference Board Consumer Confidence Index rose 2.2 points to 91.2, though it remains well below its November 2024 peak of 112.8. Meanwhile, the University of Michigan’s Consumer Sentiment Index edged up to 56.6, but remains 12.5% below a year ago. Inflation concerns persist, with 46% of consumers citing high prices as a key financial pressure. For department stores, demand signals are somewhat positive: plans to purchase big-ticket items increased, including furniture, TVs, and smartphones, and auto buying plans continued trending upward. However, expectations for household finances remain cautious and spending is shifting toward lower-cost activities and essential services. Overall, the data suggests select merchandise categories may see steady demand, but department stores face a consumer environment still constrained by price sensitivity and uneven confidence.

• The US department stores industry is projected to grow at a CAGR of 4.25% between 2025 and 2029, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is comparable to the overall economy‘s anticipated growth. The report projects sluggish but positive economic growth in the coming years. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. Real disposable income is being limited by a slow rise of employment and higher consumption prices, with a projected increase of real disposable income of 1.8% in 2025 and 1.6% in 2026. The report noted that some shifts in consumer behavior persisted in 2025, including increased online shopping.
• US consumers expected to spend an average of $890.49 in the 2025 holiday season, marking the second-highest total in 23 years and offering department store retailers a strong opportunity to capture seasonal demand, according to the National Retail Federation and Prosper Insights & Analytics. Per the report, 44% of shoppers plan to visit department stores, positioning them as a key destination alongside online and grocery channels. Of the total spend, $627.93 will go toward gifts, with the remainder allocated to food, decorations, and greeting cards. Early shopping remains popular, though 63% of consumers expect to make most purchases during Thanksgiving weekend. Retailers are responding with competitive promotions and value-driven assortments to meet demand amid economic concerns and tariff pressures. Gift cards and clothing top wish lists, aligning well with department store offerings.