Department Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 16 department store companies in the US carry a variety of merchandise organized into separate departments, with no one line of merchandise dominating sales. Major product categories include women’s, men’s, and children’s apparel; cosmetics and fragrances; footwear and footwear accessories; and accessories. Other product categories include domestics (sheets, tablecloths, towels) and other textile home furnishings; fine jewelry and watches; and small household appliances.
“Retail Apocalypse”
The impact of digital retailing hit department stores especially hard.
Trends and Fads
Because apparel generates over 50% of industry sales, department store business is subject to fashion trends and fads.
Industry size & Structure
The average department store retailer employs around 60,000 workers and generates nearly $8 billion annually.
- The department store industry consists of 16 firms that employ about 960,000 workers and generate over $130 billion annually.
- The industry is highly concentrated; the top 4 companies account for over 70% of industry revenue; the top 8 companies account for over 94%.
- Large firms include Kohl’s, Macy’s, JC Penney (owned by Catalyst Brands), and Nordstrom. The largest companies have locations in almost every state
Industry Forecast
Department Stores Industry Growth
Recent Developments
Mar 4, 2025 - Costs, Supply Chain Impacted by Tariffs
- Department stores, which rely heavily on goods imported from China, are preparing for the wide-ranging impacts of new Trump Administration trade policies. In March 2025, the US added an additional 10% tariff on Chinese imports, according to the Wall Street Journal. Anticipating the tariffs, US retailers began stockpiling goods before the costs went up. Per CNN, retailers’ inventory levels were 2% higher in the third quarter of 2024 compared to a year ago. Supply chain disruptions to avoid tariffs can be expensive and time consuming. For example, Macy’s has moved production of its private brand products out of China, according to Home Textiles Today. Department stores will incur higher procurement costs for international sourcing, and most will pass along the costs to consumers. The tariffs could have a chilling effect on consumers who reduce spending on non-essential products in anticipation of higher prices across a range of products and services.
- Long-tail effects from Covid-19 on retailers include fewer hirings, and higher store closures and bankruptcy filings, according to a recent report in Retail Dive. Store closures are expected to be worse in 2025 than in 2020. Per Coresight data, 15,000 stores are expected to permanently close in 2025 compared to 9,698 in 2020 at the height of the pandemic. The high levels of closures are due to a combination of factors including the lingering effects of the pandemic, a weak housing market, the overflow impacts from bankruptcies, and competitive pressures from companies such as Temu. The pandemic environment and its recovery period caused tremendous stress for some retailers, which is still driving retail bankruptcy filings. Hirings in 2024 were 40% lower than in 2019, as the pandemic shifted how firms staff and operate their stores. Retail staffing decisions are also influenced by ongoing economic uncertainty and falling consumer confidence. The pandemic kicked off explosive growth for e-commerce; e-commerce as a percentage of total retail sales (excluding automotive) grew from 15% in Q4 2019 to 22% in Q4 2024. The e-commerce growth curve is maturing and expected to plateau around 35% in the next decade, according to a report from FTI Consulting. In addition, hard-hit categories such as electronics and home goods, which suffered some retail whiplash due to consumers’ pulling back on spending mid-pandemic, may be close to a recovery.
- A significant shift occurred in the luxury department store landscape with HBC-owned Saks Global’s recent $2.7 billion acquisition of Neiman Marcus Group, according to Retail Dive. The acquisition brings together the nearly 40 Saks Fifth Avenue and 95 Saks Off Fifth stores with Neiman Marcus Group’s namesake 36 stores, five Last Call outlets, and two Bergdorf Goodman locations. According to Saks Global’s executive chairman Richard Baker, the deal creates “an unparalleled multi-brand luxury portfolio with tremendous growth potential. With data and innovation at our core and a portfolio of prime real estate, we aim to redefine the luxury shopping experience.” After the close of the deal, HBC plans to recapitalize its Canadian businesses as a standalone entity separate from Saks Global. In another change in the upscale department store world, Nordstrom will come back under family control in a $6.2 billion deal announced at the end of 2024.
- Legacy department store operator JC Penney merged with Sparc Group in January 2025 to form a new entity called Catalyst Brands, according to the Wall Street Journal. Sparc Group owns a portfolio of brands, including Aeropostal, Brooks Brothers, Eddie Bauer, Lucky Brands, and Nautica. The newly formed company will operate as a joint venture and owns over 1,800 locations with 60,000 employees. Sparc Group, which stands for Simon Properties Authentic Retail Concepts, is a strategic partnership between Simon Property Group, Brookfield Corporation, Shein, and Authentic Brands Group. JC Penney has struggled in recent years, filing for Chapter 11 bankruptcy protection in 2020 before being acquired by Simon Property and Brookfield for $800 million.
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