Once-mighty retail giants are faltering. Barneys New York, an icon of luxury shopping, closed its doors in 2020. Sears, a 125-year-old company, is on the brink of extinction. Even Macy’s, whose Thanksgiving Day parade is synonymous with American culture, has announced store closures and job cuts. These aren’t just failures, but signs of seismic change in the retail industry.
Department stores have defined consumer culture for over a century. These large stores were more than just places to buy goods: they were social hubs, windows into aspirational lifestyles, and symbols of urban progress.
But the world has changed. The convenience of e-commerce, the rise of fast fashion, and changing consumer values have eroded once-imperial brands. The COVID-19 pandemic has accelerated these trends, putting many major brands in a bind.
But it would be premature to write off department stores completely. These institutions have weathered economic crises before. The question now is not whether they will survive, but how they must transform to thrive in the digital age.
The invisible store
One way forward is to embrace what’s known as “invisible retail” – a concept that goes beyond simple convenience to seamlessly integrate into consumers’ lives and anticipate needs before they arise.
Imagine a department store that exists primarily as a digital platform, using AI and data analytics to curate a personalized selection for each customer. The physical location isn’t a traditional storefront, but acts as an experiential space where customers can touch products, receive expert advice, and enjoy an immersive brand experience. The actual buying process is so smooth, it’s almost invisible, running in the background by automated systems and predictive algorithms.
Nordstrom is a compelling example of this approach: its Nordstrom Local concept stores don’t hold inventory and focus on services like personal styling, alterations, and online order pickup. These smaller stores act as frictionless hubs where customers can efficiently access Nordstrom’s wide range of products and services without the overwhelming experience of a traditional department store.
Additionally, Nordstrom is integrating digital tools to improve the shopping experience across channels. The company’s omnichannel strategy includes a livestreaming shopping platform that offers customers a virtual version of an in-store meet-and-greet, allowing them to buy products in real time and interact with experts and brand founders.
This model speaks to the modern consumer’s desire for efficiency and personalization, recognizing that for many everyday purchases, the shopping experience isn’t the goal, but rather getting the right product with minimal effort.
An indispensable curator
Another avenue of reinvention is to reposition department stores as lifestyle curators rather than just product sellers. This approach recognises that consumers are increasingly looking for experiences, identity and solutions to life’s challenges.
London’s Selfridges exemplifies this concept: its Project Earth initiative goes beyond selling sustainable products to foster a sustainable lifestyle with repair services, rental options, refill stations, and more. By hosting in-store art exhibitions and even an in-store cinema, Selfridges turns shopping into a holistic experience.
This model opens up new revenue streams and deepens customer relationships: A store that helps customers plan weddings, for example, can expand that relationship to include furniture and beyond, becoming an indispensable partner in their customers’ lives.
A close-knit community
It may seem counterintuitive, but the digital age has created a deep craving for authentic in-person experiences and community, and department stores are uniquely positioned to fill this need by leveraging their physical spaces and brand heritage to create meaningful connections.
Macy’s has taken a big step in this direction with its “Macy’s Story” concept. These ever-changing retail spaces feature curated products aligned with a particular theme that rotates every few months. Designed to be community hubs rather than just shopping areas, they host events and workshops related to each theme. For example, a health-themed story called “Feel Good STORY” hosts yoga classes and nutrition workshops along with related merchandise. This approach transforms Macy’s from simply a place of sale to a dynamic community space where customers can connect, learn, and engage with the brand in a meaningful way.
By nurturing these communities, department stores are able to create an emotional connection with consumers that goes beyond a transactional one: the store becomes a place to be, not just a place to buy things.
A path to the future where tradition and innovation come together
The future of department stores lies in a smart combination of invisible retail, lifestyle curation and community building. This transformation requires a fundamental rethinking of the role of department stores in the 21st century.
At the heart of this evolution is a change in how these institutions embrace technology: it’s no longer simply a tool for efficiency, but a means to build deeper relationships and create more meaningful experiences.
Doomsayers have long predicted the demise of the department store, but what we are witnessing is not its demise, but its reinvention. The department store of the future may bear little resemblance to its predecessor, but its essence will remain the same. It will remain a place of discovery, a canvas for dreaming, and a hub where needs are not only met, but expected and exceeded. In this way, reimagined department stores will not just survive, but thrive, proving that the magic of retail still exists, even in the digital age.
See more must-read articles luck:
Opinions expressed in Fortune.com editorials are solely those of the authors and do not necessarily represent the views of luck.
The new special issue features a Wall Street legend getting a dramatic makeover, tales of cryptocurrency shenanigans and badly behaved poultry royalty.
Read the story.
