How department stores are losing a rigged game

A model built for the past that seems incredibly difficult to drag into the future.

I am unapologetically fond of department stores, and sympathetic to their struggles.

So, during a project in Zagreb this week, I did what I always do in a less familiar city: headed straight for its oldest department store.

That store was 140 year-old Nama, housed in an extraordinary and distinct art deco themed building. And as I arrived, it became clear it was closed. It had permanently shut in February 2026. I felt properly, disarmingly sad.

A few doors down, Ale Hop, a Spanish, discounted multi-product store that’s scaling across Italy and Croatia had recently opened. The store was bright, white, devoid of history and packed to the rafters with tat. It was also very busy, and a fraction of the size of Nama.

Ale Hop’s opening and Nama’s closure felt like a heavy handed reminder of how much retail has changed - and not necessarily for the better.

A concept built in, and for, the past

Retail in the near, let alone more distant future, feels wildly unpredictable.

Ecommerce is now somewhere between 20% and 30% of total sales in much of the western world, and it’s growing pretty much everywhere else.

Agentic commerce, some predict, will make up 25% of all online sales by 2030.

Meanwhile, online marketplaces are growing 6x faster than traditional retailers. As a result, there’s a sense that it’s never been easier to launch a brand, but it’s also never been harder to scale it.

Meanwhile, consumers are as difficult to pigeonhole as ever, buying vintage Ralph Lauren polos one minute, and utter crap on Shein the next. For all the data, most brands are no better at understanding what they will do next than they were 30 years ago. Some, arguably, are worse.

Now, looking out at all of this, if you were looking to start a retail business and open a store, I’m not sure what you would do.

You might well open a small, high-end multi-product store - something with the feel of a department store but a tightly curated product range and infinitely smaller square footage. More safely, you’d open an Ale Hope or Normal - something laser-focused on low price.

But I’m confident of what you wouldn’t do: open a massive shop with five-floors and dated infrastructure, right in the centre of an area with high rents and costs, selling every kind of product but rarely at better prices than you’ll find online.

Welcome to the average department store - a model built for the past that seems incredibly difficult to drag into the future.

Unfair comparisons

Something analysts tend to do (and I’ve been guilty of it myself) is point to certain global department store icons as examples of why it’s only inspiration and experience holding back those that are struggling.

And I’d argue these comparisons are almost always unfair and unhelpful.

The likes of Selfridges, Harrods and Galeries Lafayette are, in some ways, better and more fairly described as tourist attractions. All three are actually described on sites like TripAdvisor as “must-visit attractions” rather than shops.

Meanwhile, John Lewis Norwich is not, unfortunately, a tourist attraction (although, like Nama, it has a rich history - another 140-year old department store). John Lewis Norwich is just a shop - a massive shop with massive overheads and nightmarish, legacy infrastructures.

Selfridges is hugely inspirational - it’s consistently one of the most creative retail spaces in the world. But it’s also protected by the consistent flow of tourists.

For regular department stores, they are operating without buffers and without the cushion of ultra wealthy tourists splashing the cash.

They are operating in the cold, hard retail world that everyone else is in. Except most of those competitors have smaller stores in cheaper locations - or simpler still, no stores at all.

A unique importance

I think it’s really important that the retail industry acknowledges the uniqueness of department stores.

By that I mean both their unique importance, and their unique vulnerability.

Department stores are to high streets and main streets what anchor tenants are to shopping centres. Often in the centre, they’re inseparable from the history of the towns and cities they find themselves in.

I don’t think it’s an unfair stretch to say that they’re a little more important than regular shops. And plenty of studies have alluded to broader societal losses and declines when they close. They are uniquely important.

But as described already in this piece, they are uniquely vulnerable. At their worst, department stores are a less convenient, less rewarding and more expensive version of an online marketplace. You can’t find what you’re looking for - and even if you eventually find it, the journey isn’t especially fun.

What we cannot do is forget that all this uniqueness is by design. John Lewis and Macy’s, in many locations, would probably love to switch from four floors to one, and operate a smaller, more nimble store.

They see what many of us see - the fact that these almost mini department stores, offering a wide but curated selection of products - are opening everywhere. Smart people work for John Lewis and Macy’s. They aren’t restrained by talent or ideas. They’re restrained by infrastructure.

Finding a solution is a vast, nuanced and complex challenge. There are some things department stores can do to improve. Better, richer experiences are vital. Curation is now non-negotiable. An ability to be the first to partner with certain brands or campaigns in different territories makes a big difference (For NK in Sweden, being the first to land Skims was massive, for example).

But self-evidently, there are no clear fixes, and I don’t purport to have them.

All I do know is that, as an industry, we should sometimes have more empathy, and a greater capacity to acknowledge their unique structural challenges.

Because for department stores, I do think the game is rigged.