Across global fashion capitals, department stores are no longer defining themselves primarily as places to buy things. Instead, they are repositioning as destinations to spend time, discover culture, and participate in curated experiences that cannot be replicated online. From ice-skating performances and architectural tours to wine tastings, designer talks, and fine dining, the sector is betting that immersion — not assortment — is its most defensible advantage in an era dominated by e-commerce and brand-owned boutiques.

This strategic shift has gained urgency as financial stress at legacy players exposes how fragile the traditional department store model has become. The struggles of Saks, in particular, have sharpened industry awareness that merchandising tweaks alone will not reverse declining footfall and relevance. What is unfolding instead is a deeper transformation: department stores are attempting to move from transactional retail to experiential platforms, anchoring themselves in lifestyle, architecture, and social engagement rather than pure sales density.

Why Selling Products Is No Longer Enough

Department stores were built for an era when scale, assortment, and convenience were decisive advantages. That logic has eroded. Online platforms now offer broader selection and faster fulfilment, while luxury brands increasingly channel their most desirable products through their own boutiques, where they control pricing, storytelling, and customer data. In the middle, department stores face a structural squeeze: they lack the price competitiveness of mass retailers and the exclusivity of mono-brand flagships.

Against this backdrop, experience has emerged as one of the few levers still available. Analysts argue that in luxury and premium retail, the decision to shop in person must be justified by something more than access to goods. Physical stores must offer atmosphere, emotion, and narrative — elements that digital interfaces struggle to replicate. Architectural grandeur, cultural programming, and sensory engagement are increasingly seen as necessary conditions for attracting high-value customers.

This explains why investment is flowing not just into refurbishing sales floors but into restoring historic buildings, adding restaurants and bars, and programming events that encourage repeat visits. The store becomes a venue rather than a warehouse, designed to host rather than merely transact.

Experience as a Competitive Moat

Several high-profile projects illustrate how department stores are leaning into experiential differentiation. Printemps, owned by Qatari investors, has opened a new Manhattan location that foregrounds cultural storytelling as much as commerce. Paper replicas of French landmarks reference its Parisian heritage, while curated launches, wine tastings, fine dining, and champagne bars position the store as a lifestyle hub rather than a conventional retailer. The emphasis is on lingering, discovery, and social interaction — all factors that extend dwell time and deepen brand attachment.

In Paris, Galeries Lafayette has taken a similar approach by investing heavily in architectural restoration. Its renovated stained-glass cupola is not just an aesthetic upgrade but a strategic asset, reinforcing the store’s status as a cultural landmark. Management credits the revamp with pushing visitor numbers above pre-pandemic levels, suggesting that physical beauty and heritage can still draw crowds when combined with relevant retail offerings.

These efforts align with broader luxury market dynamics. Growth in recent years has been strongest in experiential categories such as hospitality, dining, and travel, rather than in traditional goods. Department stores are attempting to capture some of that momentum by blurring the line between retail and leisure, effectively competing not just with other stores but with alternative uses of consumers’ time.

When Experience Is Not a Cure-All

Yet the shift toward experience is no guarantee of success. The example of LVMH’s La Samaritaine in Paris underscores the risks. Despite an extensive and costly restoration of the historic art nouveau building, the store struggled to match performance expectations after its reopening, particularly when compared with LVMH’s more established Le Bon Marché. The eventual decision to restructure operations highlights a key reality: experiential investment must be paired with clear positioning, operational discipline, and consistent foot traffic to deliver returns.

The challenges facing Saks further illustrate that experience alone cannot compensate for structural weaknesses. Saks’ revenue decline, mounting losses, and leadership upheaval reflect not just execution missteps but a business model under pressure from all sides. Analysts note that inventory strategy, leverage from acquisitions, and the erosion of the department store’s role as a primary luxury gateway have all contributed to its difficulties.

In this context, experience is best understood not as a standalone solution but as part of a broader reinvention. Without financial flexibility, clear brand identity, and a credible value proposition for both consumers and brand partners, even the most elaborate in-store events may struggle to translate into sustainable profitability.

Reinventing the Model: Concessions, Partnerships, and Identity

As experience becomes central, many department stores are also reconsidering how they operate. One emerging direction is a shift toward concession-heavy models, where brands control inventory and staffing within the store, while the department store acts as landlord, curator, and service provider. This approach reduces inventory risk and aligns incentives, allowing stores to focus on creating compelling environments and footfall rather than managing complex supply chains.

European precedents demonstrate the potential of this model. Milan’s Galleria Vittorio Emanuele II, where space is leased through competitive bidding, has seen store values rise sharply, reinforcing the idea that prime retail locations function as experiential real estate as much as retail outlets. For department stores, this implies a return to their original role as scouts and curators of brands, rather than mass merchandisers.

Partnerships are another experimental avenue. Some retailers have hosted pop-ups or temporary outlets for digital-native or unconventional brands, seeking to tap new audiences and generate buzz. Parisian retailer BHV’s decision to host a physical outlet for Shein illustrates both the appeal and controversy of such collaborations. While they can drive traffic, they also risk diluting brand identity if not carefully aligned.

At the same time, analysts argue that department stores must strengthen their own digital identities rather than acting solely as offline complements to online platforms. The success of e-commerce specialists such as MyTheresa, which offers similar assortments with frictionless logistics and customer perks, highlights how high the bar has become. Experience, in this sense, must extend across channels, with physical spaces reinforcing — not substituting for — a coherent brand ecosystem.

A High-Stakes Bet on Time, Not Just Sales

The broader outlook for department stores remains challenging. Forecasts point to continued sales decline and limited recovery over the rest of the decade, even as the wider luxury sector grows. Traditional players such as Macy’s and Harrods have both signalled pressure on profits amid cautious consumer spending and shifting habits.

Against this backdrop, the turn toward experiential retail represents a high-stakes bet on relevance rather than volume. Department stores are wagering that by offering something fundamentally different from both online platforms and mono-brand boutiques, they can justify their physical footprint and cultural role. The strategy is less about maximising transactions per square metre and more about maximising reasons to visit.

Whether this reinvention succeeds will depend on execution, clarity, and restraint. Experience can attract attention, but only if it is authentic, aligned with brand values, and integrated into a sustainable operating model. In a retail landscape where convenience and exclusivity are already spoken for, department stores are staking their future on being places where shopping is no longer the point — but part of a broader experience worth leaving home for.

(Adapted from TheBusinessOfFashion.com)