NEW YORK CITY, New York: From New York to Paris, department stores are remaking themselves as destinations for experiences rather than just places to buy clothes, as mounting pressure on the sector underscores the challenge of staying relevant in a changing retail landscape.

The renewed push comes as Saks Global's financial troubles highlight the strain facing traditional department stores, which are losing shoppers to luxury brands' own boutiques and fast-growing e-commerce platforms. Analysts say the shift toward curated events and architectural upgrades reflects deeper structural pressures rather than a cosmetic refresh.

"In today's market conditions, selling luxury goods requires an outstanding experience, which works best in outstanding venues," said Benjamin Sebban, head of retail investment at Knight Frank in Paris.

Immersive Experiences Drive Battle for Relevance

Retailers are increasingly betting on immersive environments to draw foot traffic. Qatar-owned Printemps' new Manhattan store features paper replicas of French landmarks as a nod to its Paris roots, alongside exclusive product launches and wine tastings.

"This is more than a place to shop - it's a space to live, linger, and immerse yourself in a new kind of luxury lifestyle," Printemps America CEO Thierry Prevost told Reuters, pointing to the store's fine-dining restaurant, champagne bar, and designer talks.

In Paris, Galeries Lafayette spent more than 100 million euros (US$117 million) restoring its stained-glass cupola, a renovation the retailer credits with lifting visitor numbers above pre-pandemic levels.

The strategy aligns with Bain research showing that experiential sectors such as hospitality and fine dining drove luxury market growth between 2023 and 2025. But results have been mixed.

LVMH invested around 750 million euros in refurbishing the Art Nouveau La Samaritaine department store near Paris' Rue de Rivoli. Despite reopening in 2021, the store struggled compared with LVMH's Le Bon Marché Paris, and the two were combined in a restructuring last year.

Saks as a Warning Sign

Saks Global's difficulties have become a cautionary tale. The company reported a 13 percent year-on-year drop in second-quarter revenue to $1.6 billion in October and posted an adjusted core loss of $77 million. CEO Marc Metrick stepped down after Saks missed a bond payment, sparking reports that it was preparing for bankruptcy.

While analysts point to inventory missteps and acquisition-related debt, they say the problems run deeper.

"What you're seeing with Saks is a symptom of a much larger problem," said UBS analyst Jay Sole, noting department stores are being squeezed between mass-market retailers focused on value and luxury brands offering exclusivity through their own boutiques.

Concessions, Collaborations, and Limits

Bernstein analysts argue that U.S. department stores should adopt concession-heavy models, allowing brands to manage inventory and operations while retailers provide multi-brand sales staff. Milan's Galleria Vittorio Emanuele II, where the city leases prime retail spaces via bidding, is often cited as a successful example, with store values quadrupling over a decade.

"Multi-brand retailers need to reinvent themselves and go back to their scouting and discovery mission," said Bernstein analyst Luca Solca.

Some retailers are experimenting with partnerships. Parisian chain BHV hosted the first physical outlet for Chinese budget brand Shein in November, a move that drew criticism from rivals and consumers alike.

"The right answer would be for department stores to build out their own online offering, with their own identity," Knight Frank's Sebban said.

Bleak Outlook

Bain forecasts that global department store sales fell by four to six percent in 2025 and are expected to recover slightly through 2030, lagging the broader luxury sector. U.S. retailer Macy's warned in December of weaker-than-expected holiday-quarter profits, while London's Harrods reported a 17 percent drop in underlying operating profit for 2024.

By contrast, online luxury platforms continue to gain ground. MyTheresa more than doubled its quarterly core earnings in November, offering products similar to those of department stores but with incentives such as free shipping on large orders.