What: Department stores face ongoing challenges amid broader retail growth, with March sales declining 0.3% despite overall retail gains of 1.4%.

Why it is important: This divergence between department store performance and general retail growth reflects a fundamental shift in consumer shopping patterns, supported by recent NRF projections of stronger digital commerce growth.

The latest retail sales data reveals a stark contrast between department store performance and the broader retail sector's resilience. While overall retail sales increased 1.4% to USD 734.9 billion in March, department stores experienced a 0.3% decline, highlighting the sector's ongoing challenges. This divergence is further emphasized by the year-to-date performance, showing department store sales down 4% while total retail and food service sales grew 2.8%. Major department store chains are responding with significant strategic initiatives. Macy's plans to close approximately 150 stores over three years, retaining 350 locations, while Kohl's undergoes leadership changes and focuses on private brands under new CEO Ashley Buchanan. Saks Global faces additional challenges integrating its recent Neiman Marcus acquisition amid a softening luxury sector. The transformation of the retail landscape is particularly evident in consumer sentiment, which has reached near-record lows according to the University of Michigan survey. This declining confidence, combined with expectations of increased saving and reduced shopping, suggests continued challenges ahead for traditional retail formats.

IADS Notes: Recent market analysis provides crucial context for these developments. The National Retail Federation's March 2025 projection of 2.7-3.7% overall retail growth, with digital commerce expected to grow 7-9%, underscores the shifting retail landscape. This trend was evident during the 2024 holiday season, which saw global sales reach USD 1.2 trillion, with online sales growing 8.7% and mobile commerce accounting for 54.5% of transactions. Department stores have shown some resilience in early 2025, achieving 1.4% growth alongside specialty stores' 3.6% growth, suggesting that targeted strategies and channel optimization may offer paths to recovery.

US department store sales continue to slip in otherwise positive March for retailing