Remember when department stores staged their comeback after Covid? Shoppers were eager to re-acquaint themselves with enclosed spaces full of strangers, ready to rediscover escalators, and, more importantly, had money to burn. For a brief, shining moment, it looked like the big boys of retail were back in business.
Well, about that…
According to the latest Global Department Store Monitor from the International Association of Department Stores (IADS), global department store sales dropped 1.6% in 2024. Not a plunge, but not exactly a victory lap either. The Americas flatlined, Asia-Pacific slumped—particularly in Japan, South Korea, and Hong Kong—and Europe fared no better with both corporate-owned and independent department stores reporting an average growth of less than 1%.
Meanwhile, in Saudi Arabia…
While mature retail markets are slowing down and reassessing their next moves, Saudi Arabia is picking up speed, and fast. The country is opening the door to an entirely new kind of consumer landscape. What’s fueling this momentum? A potent mix of demographics, digital fluency, and an appetite for fresh, global experiences.
As Selvane Mohandas du Ménil, Managing Director of the International Association of Department Stores highlighted at the 2025 RLC Global Forum in Riyadh:
- 25% of the population is under 14; 62% are under 30
- Mobile penetration is 115%, and 80% of people are on social media
Translation: This isn’t your average department store customer. This is a market bursting with Gen Z energy, brand obsession, and an expectation that everything—from retail to real estate—should come with a side of experience.
Galleries Lafayette got the memo. It’s planning a Riyadh flagship in 2026, and VP of International Development, Philippe Pedone isn’t thinking racks and registers. “We’re bringing not just a store, but a brand,” he confirmed. That includes VIP rooms, niche brands, and experiences designed for a shopper as comfortable scrolling Net-a-Porter as they are sipping champagne while a stylist flips through the racks on their behalf. It’s “Pretty Woman” minus the judgmental sales staff.
Experience sells
Let’s call it like it is: Amazon, and the entire e-commerce machine, won the product war. Department stores in 2025 simply cannot outdo them in terms of speed, price or convenience. So, they are pivoting from the business of convenience to the business of meaning, leaning into something online retail can’t replicate: emotional engagement, human connection, and experience-driven spaces.
David Wilkinson, Executive Director at Steen & Strøm Oslo, gets it. “Department stores went from category, to brand, to experience,” he said. “Now, it’s about emotional connection.”
That shift aligns perfectly with what economists call the experience economy—a term coined nearly 25 years ago but more relevant now than ever. As consumers, especially younger ones, increasingly prioritize how a brand makes them feel over what it sells, the store becomes a stage. It’s no longer just a space to buy things; it’s a platform to try, play, connect, shop, and share. This is why department stores across the globe are carving out wellness hubs, café lounges, cultural pop-ups, and immersive brand activations. Because in a world of infinite choices, experience is the new competitive edge.
Reinvention vs renovation
Let’s not confuse a facelift with a reinvention. Swapping out floor tiles in the beauty department and adding a QR code to the fitting room may check a few boxes on the omnichannel bingo card, but it’s not innovation.
If department stores in 2025 want to stay relevant, especially in markets evolving as quickly as Saudi Arabia, they’ll need more than cosmetic upgrades. Reinvention starts with a fundamental rethink of what the store is for and not just what it sells.
That means narrowing the lens. The idea of being everything to everyone no longer works. Curation is what wins now, especially in an era where consumers are already drowning in options. It also means investing in actual, human-centered service. The kind that makes a VIP feel like a VIP, that delivers on personalization, and that builds loyalty through relationships, not only promotions.
And finally, it means dropping the one-size-fits-all approach. What resonates with shoppers in Beijing won’t land the same way in Riyadh. Department stores that succeed should be global in brand, but hyper-local in execution.
So, what’s next?
Here’s the good news: The department store isn’t dead. Not by a long shot. It’s just tired of being misunderstood. In Saudi Arabia, with its young, connected, and curious consumers, there’s a blank slate and a massive opportunity.
So, what’s next for department stores in 2025? Hopefully, a wake-up call and then, if they’re lucky, a renaissance.
