What: Department stores like Dillard’s, Macy’s, and Saks Fifth Avenue are introducing luxury concepts to attract high-end shoppers.

Why it is important: As department stores face declining sales and economic pressures, targeting luxury consumers—who have remained relatively unaffected by financial constraints—could provide a much-needed boost in revenue and foot traffic.

In an effort to captivate luxury shoppers and counteract declining sales, department stores are increasingly incorporating luxury brands and experiences into their offerings. Dillard’s recently launched The Coterie Shop, featuring merchandise from luxury designers, while Macy’s introduced a luxury beauty concept in Miami, enhancing its luxury beauty business alongside Bluemercury. Saks Fifth Avenue opened an experiential store in Beverly Hills, offering private shopping and styling services. These moves come at a time when luxury brands like LVMH and Hermes are reporting significant sales growth, contrasting with the performance of department stores such as Dillard’s and Macy’s, which have seen declines in both in-store and digital sales. By integrating luxury concepts, department stores aim to attract not only high spenders but also boost overall foot traffic from existing shoppers and tourists. However, the shift towards luxury also poses risks, including potential alienation of existing customer bases and the substantial investments required to create elevated shopping experiences. Despite these challenges, department stores view luxury as a key growth vector, hoping to leverage their broad offerings to appeal to both luxury and value-conscious consumers.

How department stores are attempting to win over more luxury shoppers