What: Leading department store chains are regaining relevance through targeted investments, selective expansion, and disciplined merchandising strategies.

Why it is important: The renewed focus on operational discipline and selective investment aligns with successful strategies identified among top-performing department stores in the past year.

Department stores in the United States are entering 2026 with a sense of cautious optimism, as the sector stabilises and seeks organic growth following years of consolidation and disruption. Major players such as Macy’s are concentrating resources on their most profitable locations and luxury divisions, aiming to enhance customer experience through increased staffing, improved product curation, and visual upgrades. While overall gains remain modest compared to mass merchants and off-price retailers, department stores are benefiting from a renewed consumer interest in physical shopping and mall visits, even if traffic has not yet returned to pre-pandemic levels. Regional chains like Von Maur are expanding selectively and investing in store renovations, leveraging private ownership to pursue long-term strategies. Dillard’s continues to outperform peers through strong operational management and merchandising, while JCPenney’s recent profitability signals the potential for turnaround with disciplined execution. These efforts underscore a broader industry movement toward operational excellence, strategic investment, and adaptation to evolving shopper behaviours, positioning department stores for sustained, albeit moderate, growth. 

IADS Notes: As observed in September 2025 (Forbes, "Is Macy’s turnaround gaining traction?"), Macy’s incremental gains through targeted investments mirror the sector’s broader shift toward focused growth. Dillard’s operational discipline and community engagement, highlighted in December 2025 (The Robin Report, "Dillard’s gets department store retail right"), set a benchmark for resilience, while Von Maur’s expansion and renovation strategy, detailed in October 2025 (Modern Retail, "The keys of Von Maur’s success"), exemplifies the advantages of private ownership. JCPenney’s profitability turnaround in October 2025 (Retail Dive, "JCPenney slows declines in Q2, swings to profit") further demonstrates the impact of disciplined execution. The resurgence of physical retail and mall footfall, as reported in April 2025 (The Economist, "Shopping malls are making a comeback in America"), supports the renewed relevance of brick-and-mortar formats.

US department stores poised for further gains in 2026