The Decline of Department Store Sales

Retail sales fell last month, but at department stores, they’ve been falling for more than a decade.


Many are blaming cold weather for the latest disappointing retail sales report, which showed a decline of 0.4 percent in sales in January, well over consensus expectations of a 0.1 percent drop, according to Bloomberg.

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But while the recent polar vortex may have temporarily pushed spending downward, some trends have held true, rain or shine. One of those is the recent decline of department store sales.

According to government figures, department store sales have been on the decline since the early 2000s. Census figures show sales hit their peak in January 2001, when seasonally adjusted department store sales totaled more than $19.9 billion. Last month, they totaled less than $14.2 billion.

Graph depicting department store sales.
Those figures aren’t driven downward by any broader trend in declining retail sales; in fact, retail sales (in nominal dollars) as a whole grew more or less steadily over that same period, aside from a dip during the Great Recession.

And the above-depicted data don’t even take inflation into account. Comparing January 2014 department store sales to past Januaries indicates an even steeper decline: adjusted to 2013 dollars, department stores sold nearly $26.7 billion in January 1999, the highest January on record, compared to today’s $14.2 billion (in 2014 dollars).

Graph depicting food service sales over time.

As for what is bringing department stores down, the data provide one hint: nonstore sales, which includes Internet retailers, were up by 6.5 percent from January 2013 to January 2014. Meanwhile, department store sales fell by 5.7 percent over that same period. This may indicate that consumers are going online to make the purchases they once made at department stores.

And those trends have been going on for more than a year. Whatever role nonstore retailers are playing in the decline of department store sales, looking at the two together shows just how dramatic the downward trend in department store sales is compared to a segment with which those stores often compete.

Graph depicting non-store retailer sales over time.
The idea that department stores might be losing out to retailers like Amazon is not a new one. However, the extent to which one affects the other is not entirely clear. More specialized, non-department stores may also play a role in pulling department store sales downward. Clothing store sales, for example, grew slightly, by 1.2 percent, from January 2013 to January 2014 while department store sales declined.

“I think the growth in specialty stores has partially contributed to the decline,” says Kathy Grannis, a spokeswoman for the National Retail Federation, in an email to U.S. News.

She also says online shopping may not have stolen buyers away from department stores.

“I think the Internet has actually helped build brand recognition for department stores. Companies like Macy’s and J.C. Penney have done a great job providing a seamless experience for all their shoppers, regardless of channel,” Grannis says.