Business

How Macy’s, Dillard’s, and Nordstrom are getting their groove back this holiday season

Published

4 weeks ago

November 7, 2025

A Los Angeles Times headline in 1995 asked, “Can the department store survive?” A quarter century later, CNN proclaimed that “America has turned its back on big department stores.”

These are just two of many obituaries predicting the imminent demise of the U.S. department store—and all that pessimism has been backed by the data. Department stores have been losing market share for decades, first to big-box discounters like Walmart and Target in the 1980’s and 90’s, and more recently to Amazon. The department store’s percentage of total U.S. retail sales has fallen from about 14% in 1993 to only 2.6% last year.

But now, perhaps improbably, there are new signs of life in the retail format, with growth this year at Macy’s, Bloomingdale’s, Dillard’s, Nordstrom, and Belk—and signs of stabilization at J.C. Penney and Kohl’s.

The path that department stores are taking back into shoppers’ favor is a return to what made them popular in the first place: well-maintained and attractive spaces with attentive staff, a well-chosen selection of products, and enticing new brands. Many chains are finding that fewer stores are better, and have been shutting down locations to maintain quality and brand congruence.

With most products available online, often at lower prices, department stores must offer some real value to the brick-and-mortar shopper. But it’s an uphill climb to reverse some of the erosion of standards that have diminished the appeal of department-store shopping. Competition with the Walmarts, Targets, and T.J. Maxxes of this world led many department store companies to cut corners and skimp on retail flourishes, eroding their raison d’être in the shopper’s mind.

“You know what was tough about department stores?” Macy’s Inc. CEO Tony Spring recently told Fortune. “We didn’t execute well. A bad store, no matter what you call it, is going to fail.”

A string of bad seasons

And indeed many did fail. In 2020 alone, Neiman Marcus, J.C. Penney, Lord & Taylor, and Bon-Ton Stores filed for bankruptcy protection. They were already struggling before they were pushed over the edge by a pandemic that kept shoppers away for months. A couple of years before that, Barneys New York and Sears did the same, eventually going out of business altogether.

As Spring told Fortune, Macy’s recent success—including its best quarter for sales growth in three years—is thanks to a playbook focused on less store clutter, a more focused assortment of products and brands, and more staffing in key departments such as women’s shoes and dresses.

Rival Dillard’s, a primarily Southern and Southwestern chain with 290 stores, has also seen modest growth by following those basic retail precepts. Unlike many of its mall-based peers, Dillard’s has rarely deviated from its formula of neat stores and thoughtful product discovery, and is roughly the same size today as it was 15 years ago by revenue and store count—unlike chains that expanded rapidly, then closed scores of stores.

Another department store that appears to be staging a comeback is Nordstrom, which went private this summer to revitalize its business outside of Wall Street’s glare. It has seen sales rise 4.1% in the first half of 2025. Belk, a privately held Southern chain, is seeing growth too, though more modest, according to industry estimates.

Department stores, like this Nordstrom in Chicago, are making spaces that are more inviting to shoppers.

Jeff Schear/Getty Images for Nordstrom

Still, it’s too early to pop the champagne. Dillard’s and Macy’s modest comparable sales growth of about 1% last quarter is hardly the mark of a roaring retail renaissance. And Penney and Kohl’s are still seeing sales declines, albeit less severe than just a few quarters ago.

Meanwhile, some companies are still deep in the doldrums: Saks Global recently said its sales fell 13% last quarter. In that case, the decline is largely because vendors are not sending it enough merchandise given recent delays in getting payment from the debt-laden company. Clearly, department stores are not out of the woods.

Catering to the bargain-seekers

The holiday season, during which department stores get nearly a third of their annual sales, will be a major test of their nascent comeback. The Mastercard Economics Institute has forecast that sales will rise 3.6% November and December, a slower clip compared to last year’s holiday season. And shoppers are likely to be particularly bargain-hungry, meaning they will be holding out for deals, a trend department store executives are already seeing.

“Many Americans are more stressed than ever about holiday spending, and wallets are stretched,” JCPenney chief customer and marketing officer Marisa Thalberg said in a recent presentation of the retailer’s holiday season strategy. The company’s response? To offer more deals, and earlier in the season.

Kohl’s Chief Marketing Officer Christie Raymond expects shoppers will visit stores more often during the Thanksgiving to Christmas period, but buy less during each visit and gravitate to cheaper products as they feel the economic pinch.

“We are seeing trading down,” Raymond said at a media briefing in October at Kohl’s design office in Manhattan. “Whereas some customers were maybe purchasing a premium brand, we are seeing them trade down to private brands.” This could bode well for the success of Kohl’s recent efforts to refresh its long languishing store brands.

Even the high-end store Nordstrom, with its well-heeled clientele, is emphasizing more low-priced items than usual this year. At its New York flagship, Nordstrom has built a two-story area to showcase giftable items, with about 800 products that cost less than $100.

Back to the future

A century ago, department stores began a golden age in which they were at the forefront of America’s burgeoning consumer economy. They were grand behemoths, typically in city centers, where shopping was an event—rather than the constant pastime it is today, often done by scrolling on a device.

These were memorable experiences: a trip to JCPenney to buy a Sunday best suit; the thrill of choosing the perfect debutante ball gown at Neiman Marcus; or the much-anticipated purchase of a new household appliance at Sears.

In the 1960s, going shopping was still an event.

H. Armstrong Roberts/ClassicStock/Getty Images

In the 1950’s, Macy’s, Sears and Penney began expanding with large, multi-level stores thanks to the mushrooming of suburban malls across the country.

But a couple of decades later, the rise of big-box retailers that boasted lower prices, like Walmart and Target, challenged that supremacy. And by the 1990’s, department stores were in secular decline. The rise of Amazon and e-commerce more broadly didn’t help.

Amid all this change, department stores started to seem rather old-fashioned, a sea of sameness offering tired brands in badly lit, boilerplate stores where everything seemed to eventually end up in the discount bin. Under pressure, department stores tried to cut margins by reducing staffing, which made them feel messy and untended.

And several leaned into consolidation—which in some ways compounded the problem. When Macy’s purchased May Department Stores in 2006 and acquired regional chains such as Marshall Field’s, it found itself with too many stores, too near each other.

Shifts in consumers’ tastes also dealt a blow: Customers were no longer wowed by being sprayed with perfume upon entry to the beauty section, preferring the less didactic way of selling beauty products that have made the more youth-friendly brand Ulta Beauty a phenomenon in the last decade.

Efforts to compete with Amazon during its ascent in the 2010s had department stores playing catchup on supply chain prowess and integrating stores with e-commerce—sometimes to the detriment of in-store experience. “They forgot what they existed for,” said Joel Bines, a former retail consultant with AlixPartners and a current director of North Carolina-based Belk. ”It became all about efficiency and conglomeration and homogenization.”

In search of fashion authority

Now the pendulum is swinging back toward a focus on how department stores look and feel for customers, the merchandise they sell, and on standing out from the others. A big part of that is undoing the expansions of previous decades: Macy’s is prioritizing 125 of its stores, or a third of its fleet, while closing dozens more stores in the next two years. And JCPenney shed hundreds of stores in its 2020 bankruptcy and is now down to 650 locations, from 1,100 a decade ago.

But as the adage goes in the retail industry, you can’t shrink your way back to greatness. Department stores still have to make a compelling case for consumers to come back.

And there’s ground to regain with the brands department stores sell as well. Luxury brands have sought to distance themselves from the increasingly shabby in-store experience and ubiquitous mark-downs at department stores. For years, fashion companies like Ralph Lauren pulled their products from Macy’s stores to sell more of their products direct to consumers online and at their own stores.

But now, Macy’s CEO Spring, who is credited with revitalizing Bloomingdale’s in the decade he led that chain, is betting that the retailer’s massive reach, with 40 million customers, combined with its improved stores, can restore the brand’s “fashion authority” and lure top brands back.

Department stores are also looking to partner with new brands. JCPenney, for instance, will be selling exclusive items by designer Rebecca Minkoff for the 2025 holiday season.

Winning back older customers

To recreate a premium shopping experience, department stores have to find the right balance between stocking enough variety to serve a range of customers and not cluttering stores with too many products. To that end, Nordstrom and Macy’s are among the chains trimming down their assortments.

That does leave retailers less margin for error and requires a better mastery of data analytics to improve demand forecasting—making sure that what is on offer matches what shoppers want. That will be a challenge for some chains. “They are dealing with this beast of too much data and not enough actionable insights,” says Shelley Kohan, a professor at Fashion Institute of Technology in New York and a former Macy’s executive, noting that this is an area where AI can help.

Still, even if all these chains do renew themselves, no one should expect them to suddenly re-emerge as a big threat to the likes of Walmart or T.J. Maxx. Trying to win new, younger shoppers is expensive and may end up being futile. Some analysts say that’s why department stores should focus on older shoppers, who have much more disposable income. “While some are chasing the finicky Gen Z and millennials, they should really be focused on recapturing Gen X,” says FIT’s Kohan.

Winning back those existing consumers who remember the glamor and delight of an old-fashioned department store shopping spree is the key, says Bines. “Your priors become buyers again, and the buyers become loyal,” he says. “It’s a self-perpetuating cycle. And then maybe you can win some new shoppers.”

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Business

Quant who said passive era is ‘worse than Marxism’ doubles down

Published

23 minutes ago

December 6, 2025

Jace Porter

Inigo Fraser Jenkins once warned that passive investing was worse for society than Marxism. Now he says even that provocative framing may prove too generous.

In his latest note, the AllianceBernstein strategist argues that the trillions of dollars pouring into index funds aren’t just tracking markets — they are distorting them. Big Tech’s dominance, he says, has been amplified by passive flows that reward size over substance. Investors are funding incumbents by default, steering more capital to the biggest names simply because they already dominate benchmarks.

He calls it a “dystopian symbiosis”: a feedback loop between index funds and platform giants like Apple Inc., Microsoft Corp. and Nvidia Corp. that concentrates power, stifles competition, and gives the illusion of safety. Unlike earlier market cycles driven by fundamentals or active conviction, today’s flows are automatic, often indifferent to risk.

Fraser Jenkins is hardly alone in sounding the alarm. But his latest critique has reignited a debate that’s grown harder to ignore. Just 10 companies now account for more than a third of the S&P 500’s value, with tech names driving an outsize share of 2025’s gains.

“Platform companies and a lack of active capital allocation both imply a less effective form of capitalism with diminished competition,” he wrote in a Friday note. “A concentrated market and high proportion of flows into cap weighted ‘passive’ indices leads to greater risks should recent trends reverse.”

While the emergence of behemoth companies might be reflective of more effective uses of technology, it could also be the result of failures of anti-trust policies, among other things, he argues. Artificial intelligence might intensify these issues and could lead to even greater concentrations of power among firms.

His note, titled “The Dystopian Symbiosis: Passive Investing and Platform Capitalism,” is formatted as a fictional dialog between three people who debate the topic. One of the characters goes as far as to argue that the present situation requires an active policy intervention — drawing comparisons to the breakup of Standard Oil at the start of the 20th century — to restore competition.

data-srcyload

In a provocative note titled “The Silent Road to Serfdom: Why Passive Investing is Worse Than Marxism” and written nearly a decade ago, Fraser Jenkins argued that the rise of index-tracking investing would lead to greater stock correlations, which would impede “the efficient allocation of capital.” His employer, AllianceBernstein, has continued to launch ETFs since the famous research was published, though its launches have been actively managed.

Other active managers have presented similar viewpoints — managers at Apollo Global Management last year said the hidden costs of the passive-investing juggernaut included higher volatility and lower liquidity.

There have been strong rebuttals to the critique: a Goldman Sachs Group Inc. study showed the role of fundamentals remains an all-powerful driver for stock valuations; Citigroup Inc. found that active managers themselves exert a far bigger influence than their passive rivals on a stock’s performance relative to its industry.

“ETFs don’t ruin capitalism, they exemplify it,” said Eric Balchunas, Bloomberg Intelligence’s senior ETF analyst. “The competition and innovation are through the roof. That is capitalism in its finest form and the winner in that is the investor.”

Since Fraser Jenkins’s “Marxism” note, the passive juggernaut has only grown. Index-tracking ETFs, which have grown in popularity thanks to their ease of trading and relatively cheaper management fees, are often cited as one of the primary culprits in this debate. The segment has raked in $842 billion so far this year, compared with the $438 billion hauled in by actively managed funds, even as there are more active products than there are passive ones, data compiled by Bloomberg show. Of the more than $13 trillion that’s in ETFs overall, $11.8 trillion is parked in passive vehicles. The majority of ETF ownership is concentrated in low-cost index funds that have significantly reduced the cost for investors to access financial markets.

In Fraser Jenkins’s new note, one of his fictitious characters ask another what the “dystopian symbiosis” implies for investors.

“The passive index is riskier than it has been in the past,” the character answers. “The scale of the flows that have been disproportionately into passive cap-weighted funds with a high exposure to the mega cap companies implies the risk of a significant negative wealth effect if there is an upset to expectations for those large companies.”

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Business

Why the timing was right for Salesforce’s $8 billion acquisition of Informatica — and for the opportunities ahead

Published

55 minutes ago

December 6, 2025

Jace Porter

The must-haves for building a market-leading business include vision, talent, culture, product innovation and customer focus. But what’s the secret to success with a merger or acquisition?

I was asked about this in the wake of Salesforce’s recently completed $8 billion acquisition of Informatica. In part, I believe that people are paying attention because deal-making is up in 2025. M&A volume reached $2.2 trillion in the first half of the year, a 27% increase compared to a year ago, according to JP Morgan. Notably, 72% of that volume involved deals greater than $1 billion.

There will be thousands of mergers and acquisitions in the United States this year across industries and involving companies of all sizes. It’s not unusual for startups to position themselves to be snapped up. But Informatica, founded in 1993, didn’t fit that mold. We have been building, delivering, supporting and partnering for many years. Much of the value we bring to Salesforce and its customers is our long-earned experience and expertise in enterprise data management.

Although, in other respects, a “legacy” software company like ours — founded well before cloud computing was mainstream — and early-stage startups aren’t so different. We all must move fast and differentiate. And established vendors and growth-oriented startups have a few things in common when it comes to M&A, as well.

First and foremost is a need to ensure that the strategies of the two companies involved are in alignment. That seems obvious, but it’s easier said than done. Are their tech stacks based on open protocols and standards? Are they cloud-native by design? And, now more than ever, are they both AI-powered and AI-enabling? All of these came together in the case of Salesforce and Informatica, including our shared belief in agentic AI as the next major breakthrough in business technology.

Don’t take your foot off the gas

In the days after the acquisition was completed, I was asked during a media interview if good luck was a factor in bringing together these two tech industry stalwarts. Replace good luck with good timing, and the answer is a resounding, “Yes!”

As more businesses pursue the productivity and other benefits of agentic AI, they require high-quality data to be successful. These are two areas where Salesforce and Informatica excel, respectively. And the agentic AI opportunity — estimated to grow to $155 billion by 2030 — is here and now. So the timing of the acquisition was perfect.

Tremendous effort goes into keeping an organization on track, leading up to an acquisition and then seeing it through to a smooth and successful completion. In the few months between the announcement of Salesforce’s intent to acquire Informatica and the close, we announced new partnerships and customer engagements and a fall product release that included autonomous AI agents, MCP servers and more.

In other words, there’s no easing into the new future. We must maintain the pace of business because the competitive environment and our customers require it. That’s true whether you’re a small, venture-funded organization or, like us, an established firm with thousands of employees and customers. Going forward we plan to keep doing what we do best: help organizations connect, manage and unify their AI data.

Out with the old, in with the new

It’s wrong to think of an acquisition as an end game. It’s a new chapter.

Business leaders and employees in many organizations have demonstrated time and again that they are quite good at adapting to an ever-changing competitive landscape. A few years ago, we undertook a company-wide shift from on-premises software to cloud-first. There was short-term disruption but long-term advantage. It’s important to develop an organizational mindset that thrives on change and transformation, so when the time comes, you’re ready for these big steps.

So, even as we take pride in all that we accomplished to get to this point, we now begin to take on a fresh identity as part of a larger whole. It’s an opportunity to engage new colleagues and flourish professionally. And importantly, customers will be the beneficiaries of these new collaborations and synergies. On the day Informatica was welcomed into the Salesforce family and ecosystem, I shared my feeling that “the best is yet to come.” That’s my North Star and one I recommend to every business leader forging ahead into an M&A evolution — because the truest measure of success ultimately will be what we accomplish next.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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Business

The ‘Great Housing Reset’ is coming: Income growth will outpace home-price growth in 2026

Published

1 hour ago

December 6, 2025

Jace Porter

Homebuyers may experience a reprieve in 2026 as price normalization and an increase in home sales over the next year will take some pressure off the market—but don’t expect homebuying to be affordable in the short run for Gen Z and young families.

The “Great Housing Reset” will start next year, with income growth outpacing home-price growth for a prolonged period for the first time since the Great Recession era, according to a Redfin report released this week.

The residential real estate brokerage sees mortgage rates in the low-6% range, down from down from the 2025 average of 6.6%; a median home sales price increase of just 1%, down from 2% this year; and monthly housing payments growth that will lag behind wage growth, which will remain steady at 4%.

These trends toward increased affordability will likely bring back some house hunters to the market, but many Gen Zers and young families will opt for nontraditional living situations, according to the report.

More adult children will be living with their parents, as households continue to shift further away from a nuclear family structure, Redfin predicted.

“Picture a garage that’s converted into a second primary suite for adult children moving back in with their parents,” the report’s authors wrote. “Redfin agents in places like Los Angeles and Nashville say more homeowners are planning to tailor their homes to share with extended family.”

Gen Z and millennial homeownership rates plateaued last year, with no improvement expected. Just over one-quarter of Gen Zers owned their home in 2024, while the rate for millennial owners was 54.9% in the same year.

Meanwhile, about 6% of Americans who struggled to afford housing as of mid-2025 moved back in with their parents, while another 6% moved in with roommates. Both trends are expected to increase in 2026, according to the report.

Obstacles to home affordability

Despite factors that could increase affordability for prospective homebuyers, C. Scott Schwefel, a real estate attorney at Shipman, Shaiken & Schwefel, LLC, told Fortune that income growth and home-price growth are just a few keys to sustainable homeownership.

An improved income-to-price ratio is welcome, but unless tax bills stabilize, many households may not experience a net relief, Schwefel said.

“Prospective buyers need to recognize that affordability is not just price versus income…it’s price, mortgage rate and the annual bill for living in a place—and that bill includes property taxes,” he added.

In November, voters—especially young ones—showed lowering housing costs is their priority, the report said. But they also face high sale prices and mortgage rates, inflated insurance premiums, and potential utility costs hikes due to a data center construction boom that’s driving up energy bills. The report’s authors expect there to be a bipartisan push to help remedy the housing affordability crisis.

Still, an affordable housing market for first-time home buyers and young families still may be far away.

“The U.S. housing market should be considered moving from frozen to thawing,” Sergio Altomare, CEO of Hearthfire Holdings, a real estate private equity and development company, told Fortune.

“Prices aren’t surging, but they’re no longer falling,” he added. “We are beginning to unlock some activity that’s been trapped for a couple of years.”

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