Department Stores

The 18 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 some 50% of industry sales, department store business is subject to fashion trends and fads.

Sep 8, 2026 - Dillard's Signals Stable Demand

• Dillard’s second-quarter results suggest the US department store industry is stabilizing but remains a low-growth business. Retail and comparable-store sales each increased 1%, while first-half sales and comps rose 2%, indicating consumers are still spending selectively despite economic uncertainty. Profitability strengthened, with net income rising to $97.7 million and retail gross margin reaching 40.9%, although a $37.2 million tariff refund provided a substantial boost and is not expected to recur. Meanwhile, operating expenses increased on higher payroll costs and inventory rose 5%. Overall, Dillard’s results point to resilient but modest demand, with future industry performance dependent on disciplined inventory, margin, and expenses rather than strong sales growth.
• Weakening consumer confidence in August points to a more cautious outlook for US department stores, particularly for discretionary categories such as apparel and home goods. The University of Michigan Index of Consumer Sentiment fell 6.3% from July to 51.7 and was 11.2% below a year earlier, reflecting persistent inflation concerns and weaker views of both current and future economic conditions. Separately, The Conference Board Consumer Confidence Index edged down to 89.4 from 90.2 in July. Its Present Situation Index improved to 121.2, but the Expectations Index fell to 68.2 as consumers grew more pessimistic about business conditions, employment and income prospects. Together, the results suggest department stores may face softer discretionary spending and greater demand for promotions, value pricing and off-price merchandise.
• According to a Retail Dive report, Saks Global's emergence from bankruptcy as Exemplar Luxury Group underscores the ongoing challenges facing the US department store industry, particularly in the luxury segment. The company reduced its debt by about 75%, from $3.4 billion to $840 million, but also closed roughly 100 stores, leaving a 49-store portfolio and targeting profitability within three years. The restructuring reflects continued pressure to reduce costs, optimize store footprints, and improve financial flexibility. While the company has rebuilt relationships with more than 700 vendors, analysts caution that its remaining debt and financing structure could limit future investments in stores and customer experience. The contrast with competitors expanding their off-price businesses also highlights the importance of value-oriented formats in today's retail environment. Overall, the restructuring illustrates both the financial pressures and strategic repositioning occurring across the US department store industry.
• Department stores are tied with online retailers as the leading shopping destination for Mother’s Day purchases this year, according to data from the National Retail Federation, highlighting a potential sales lift for the US department store industry. NRF projects total Mother’s Day spending will reach a record $38 billion in 2026, with consumers expected to spend an average of $284.25 per person. Strong demand for jewelry, clothing accessories, greeting cards, and gifts could benefit department stores, which typically carry a broad range of holiday merchandise. The report also found consumers are prioritizing unique and memorable gifts despite economic uncertainty, which may help support department store traffic and promotional activity during the holiday shopping period.

Industry size & Structure

The average department store retailer employs around 56,278 workers and generates nearly $2.4 billion annually.

• The department store industry consists of 18 firms that employ about 1,013,000 workers and generate over $43.7 billion annually.
• The industry is highly concentrated; the top 4 companies account for over 80% of industry revenue; the top 8 companies account for over 95%.
• Large firms include Kohl’s, Macy’s, JC Penney (owned by Catalyst Brands), and Nordstrom. The largest companies have locations in almost every state.