What: Coresight annually reviews the US department store market and explores the changes taking place.

Why it is important: Store and e-commerce integration is, according to Coresight, the only way for US department stores to operate efficiently, in order to convert and connect with customers while also making the most of the store fleet and improving the inventory management. Somehow, it is also expected that concentration increases as the top 3 companies already represent 67% of the total market.

According to Coresight Research, the US department store sector is expected to see a slight decline in revenue in 2023, totalling $85.3 billion. They anticipate that the revenue will grow slowly between 2022-2024, then start to pick up in 2025 and reach 8.1% below pre-pandemic levels in 2027.

Online sales will play a role in the growth of the sector, with a projected penetration of 36.8% by 2027. Kohl's and Macy's are the most popular department stores among consumers and the top three stores (Kohl's, Macy's, and Nordstrom) are expected to see a combined revenue of $57.6 billion in 2022, following a growing concentration in the sector.

The report suggests that 2023 will be a turning point for US department stores to integrate their online and physical platforms, making it easier for consumers to discover and purchase products. They will make investments in marketplaces, personalization, and virtual selling to support online sales growth, and in their stores and supply chains for faster delivery and convenience.

Retailers are also expected to form more partnerships and category expansions to meet the needs of consumers, leading for instance to shop-in-shop investments (physically and digitally). In the future, the distinction between online and in-store will fade as consumers shop in a seamless, integrated way.

The report includes numerical data about Dillard’s, JCPenney, Kohl’s, Macy’s, Neiman Marcus, and Saks Fifth Avenue.

An outlook of the US department store market