What: A generational divide is emerging in department store retail, with luxury-focused formats like Bloomingdale’s outperforming mid-market peers by appealing to higher-income and older shoppers.

Why it is important: Understanding generational preferences is crucial for department stores seeking to balance tradition with digital transformation and evolving consumer habits.

Department stores are experiencing a clear generational divide, with older consumers remaining loyal to in-store shopping and personalized service, while Gen Z and younger shoppers increasingly favor online channels and digital experiences. Data shows that the majority of customers at stores like Macy’s and Bloomingdale’s are over 45, and boomers are far more likely to prefer brick-and-mortar shopping. This loyalty is driven by generous return policies, attentive sales associates, and in-person perks that are less common online. In contrast, Gen Z’s shopping habits are shaped by social media, convenience, and the “tiktokification” of retail, making it challenging for traditional department stores to capture their interest. However, luxury-focused formats such as Bloomingdale’s are showing resilience, outperforming mid-market peers by targeting higher-income shoppers and offering premium assortments. As economic pressures and shifting habits reshape the sector, department stores must innovate and adapt their strategies to engage both older and younger generations, balancing heritage with digital transformation.

IADS Notes: Recent analyses confirm the generational divide in department store appeal, with Gen Z and Millennials redefining what constitutes a retail “necessity” and prioritizing experiences, digital convenience, and social media influence in their shopping decisions (WWD, May 2025; Retail Week, February 2025). This shift is forcing department stores to rethink their strategies, as highlighted by Retail Week in August 2025, which notes that the format remains relevant when operators invest in operational excellence and customer service. The resilience of luxury-focused department stores like Bloomingdale’s is well documented, with four consecutive quarters of growth in 2025 (WWD, September 2025) and a strong focus on premium positioning and customer experience, as discussed in McKinsey’s July 2025 interview with Bloomingdale’s CEO. Meanwhile, The Retail Bulletin in April 2025 emphasizes that experiential retail and superior service standards are key to department store resilience, while Forbes in July 2025 underscores the importance of trust-based return policies in building loyalty. These developments illustrate how department stores must balance heritage, innovation, and evolving consumer expectations to remain relevant.

How Seriously Are Department Stores Struggling With Gen Z?