A digital revolution is taking place within department stores: “super apps”, AI-powered personalisation, and omnichannel innovation transform legacy retailers into e-commerce innovators.

IADS members’ e-commerce directors recently met to exchange on how e-commerce can vitalise heritage retail. Their discussions revealed a common conviction: the future belongs to retailers that blend human-centred apps, intelligent data and physical store muscle into one seamless journey. From near-instant deliveries in Dubai to conversational shopping in Mexico, participants showed that department stores are at the forefront of retail's technological evolution.

Super apps: the flagship store in your pocket

Department stores are moving beyond traditional e-commerce websites to create comprehensive super apps that combine shopping, financial services, loyalty programmes, and lifestyle features such as restaurant and service booking. These digital ecosystems are delivering remarkable results, with some retailers reporting conversion rates nearly ten times higher on mobile apps compared to their websites.

The most successful implementations aim to integrate everything, from flagship and financial services to travel agencies and concierge services, creating an evolving digital ecosystem that keeps customers engaged throughout their luxury journey. El Palacio de Hierro offered perhaps the boldest vision: mobile app users are demonstrating significantly higher engagement levels, visiting stores more frequently and spending more than traditional website users and engaging more deeply than web-only shoppers. On its side, Breuninger now designs every digital feature within its app environment first, confident that richer first-party data will pay dividends across channels. Others are weighing when to double down on apps versus emerging AI assistants. Magasin du Nord, for example, benchmarks user expectations to determine whether to enhance app features.

Across varying initiatives, participants agreed that owning the primary digital doorway is essential to defend both brand equity and margins against marketplace giants.

Turning data into dialogue

Department stores, once known for their grand façades, are increasingly defined by invisible layers of machine learning. Retailers shared how they now generate personalised copy, sizing guidance and concierge-style chat through generative and agentic AI. For example, Galeries Lafayette utilises AI to enhance product data and conduct A/B Tests, embedding optimisation into its day-to-day culture.

AI is also reshaping back-office workflows. Magasin du Nord detailed how it transferred ownership of data quality from IT to e-commerce specialists, pairing human validation with AI enrichment tools. The shift unlocked smoother search and higher conversion rates while providing merchandising teams with a single source of truth.

Yet algorithms can only flourish inside the right culture. Breuninger described a top-down push toward “test-and-learn” mind-sets that reward calculated risks and publish even failed experiments company-wide. Leaders say this openness has accelerated decision-making and kept the brand ahead of fast-moving digital trends.

AI transforms personalisation and customer service

Artificial intelligence is transforming the way department stores engage with customers, from personalised product recommendations to automated customer service. Retailers are implementing AI-powered digital concierges that can handle the majority of customer conversations while maintaining personalised service levels.

The most innovative applications include conversational commerce through messaging platforms, as seen with El Palacio de Hierro on WhatsApp, AI-enhanced product imagery and descriptions, and predictive analytics for inventory management. Some stores are experimenting with AI shopping agents that can recommend products, monitor prices, and even place orders on behalf of customers.

Search engine optimisation is being reimagined for the AI era, with retailers adapting their content strategies to appear in AI-powered search results. This shift recognises changing consumer behaviour, as younger generations increasingly turn to AI tools rather than traditional search engines for product discovery.

Omnichannel that hits all the right notes

Stores are no longer static showrooms. They are fulfilment hubs, media stages and loyalty accelerators. Department stores are successfully bridging online and offline experiences through sophisticated omnichannel strategies. Ship-from-store initiatives are expanding rapidly, with Galeries Lafayette seeing immediate increases in fulfilment capacity when opening stock across their entire store network.

Speed remains a defining battleground. Level Shoes from the Chalhoub Group now promises near-instant delivery across the UAE, utilising service speed as a luxury differentiator while simultaneously launching a pre-loved category that attracts sustainably minded and vintage-loving consumers without cannibalising core sales.

Loyalty is evolving just as quickly. Breuninger’s four-tier programme layers experiential rewards, such as early access to limited drops or concert tickets, over traditional points, using behavioural triggers and gamified messaging to keep members climbing the status ladder.

The most successful omnichannel customers are proving significantly more valuable than single-channel shoppers, driving retailers to strengthen their multi-channel offerings. Services like click-and-collect, real-time inventory visibility, and seamless returns across channels are becoming standard expectations.

The department store sector is demonstrating remarkable adaptability. The focus on continuous testing, cultural transformation, and customer-centric innovation suggests a sector well-positioned for future challenges. The success of these initiatives indicates that the future of luxury retail lies not in choosing between physical and digital channels, but in creating seamless, personalised experiences that leverage the best of both worlds.

About IADS

The International Association of Department Stores (IADS) is the only expert body specialising globally in the department store retail format. Consisting of leading department store members worldwide, the Association serves as an international network, facilitating exchange and communication among its members. It also conducts research to address the current challenges of department stores and provide actionable insights for its members.

Today, IADS permanent members include Beijing Hualian Group (PRC), Bloomingdale's (USA), Boyner (Turkey), Breuninger (Germany), Chalhoub Group (UAE), Centro Beco (Venezuela), El Corte Inglés (Spain), El Palacio de Hierro (Mexico), Falabella (Chile, Colombia and Peru), Galeries Lafayette (France), John Lewis & Partners (UK), Lifestyle International Holding (Hong Kong), Magasin du Nord (Denmark), Manor (Switzerland), The Mall Group (Thailand), TSUM Kyiv (Ukraine). These retail leaders are joined by a network of other department stores and retail companies as corresponding members.

Together, the IADS members, all key players in their respective markets, create a landscape of diverse business models and cultures, representing more than €40.5 billion in cumulated annual turnover, achieved through over 549 stores with 251,000 associates in 28 countries.

Through its activities and partnerships with NellyRodi, Retail Hub, RH-ISAC and Newstores, the Association constantly stays up to date on its members' questions and challenges. It generates solution-driven problem-solving processes for its members, preparing them to face the future of the retail industry.

Read the full press release below:
IADS Press Release: E-commerce directors meeting

Read the full press release, in French, below:
IADS - Communiqué de presse - Directeurs E-commerce.