PARIS — The economy may be stabilizing, but shoppers aren’t vibing with it.
Global department store sales rose just 0.63 percent in the 2024 to 2025 financial year, according to a new report from the International Association of Department Stores, pointing to what industry executives describe as a “vibecession.”
In the time period, global macroeconomic indicators improved, but consumer confidence remained muted.
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The modest growth follows a 1.6 percent decline the previous year, indicating a very fragile post-pandemic recovery across the sector — instead reflecting what the IADS called a phase of “cautious normalization.”
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The report, which compiles data from 58 department stores globally, highlights a growing disconnect between economic data and consumer sentiment. Before the current oil price spike, inflation had eased in several markets accompanied by steady growth. But shoppers continue to look for value and restrict their discretionary spending.
“The macroeconomic picture suggests resilience, but the consumer is behaving defensively,” the study said, pointing to a retail environment shaped more by perception than by underlying macro data.
For department stores, that disconnect has translated into a heavier reliance on promotions and cost controls. Retailers have looked to discounting to drive traffic and conversion, while also investing in efficiency measures, including using AI to better manage inventory.
IADS noted that search engine optimization is “obsolete” and falling out of favor for generative engine optimization, which has quickly altered e-commerce traffic models, forcing retailers to adapt digital strategy for machine readability to be appealing to AI agents.
Those moves are helping steady sales — but they are not driving growth.
IADS data shows that the easy wins of the big post-pandemic bounce back are over, with retailers refocusing on discipline and efficiency. Margins remain under pressure as discounting becomes the norm, rather than a tactical or seasonal move.
But the current geopolitical headwinds, including tariffs and currency fluctuations, are adding a new complexity for retailers. The result is the industry is settling into a holding pattern, while trying to refocus on experiential shopping and exclusive products in an effort to stand out from the retail pack.
The secondhand and recommerce segment outpaced broader retail growth, with Galeries Lafayette opening secondhand watch and jewelry spaces, while Vinted became the top clothing retailer in France. The personal luxury goods market declined 2 percent in 2024, with aspirational luxury consumption dropping sharply among Gen Z.
Simultaneously, physical retail experienced a renaissance of quality over quantity. While total store counts stabilized, retailers closed underperforming locations to fund experiential flagships, prioritizing immersive experiences over footprint expansion.
The Saks Global bankruptcy in the U.S. “sent shockwaves through the industry,” and coupled with tariff uncertainty hit major retailers across the board.
Latin America demonstrated resilience, achieving growth despite currency appreciation, buoyed by high consumer confidence since the area was relatively insulated from U.S.-China trade tensions.
India emerged as a growth leader, capitalizing on rising discretionary spending among affluent consumers.
China and Hong Kong faced a “structural reset driven by the property crisis and weak consumption, challenges intensified by tariff threats that deterred both domestic consumption and international investment.” Hong Kong, in particular, suffered as currency fluctuations made hopping across the border from Shenzhen less advantageous, and mainland China was hit by the continuation of the property valuations collapsed.
Southern Europe benefited from tourism, while northern Europe suffered from inflation and stagnating sales. The U.K. was hit by the ongoing absence of tax-free shopping, which has suppressed international spending.
Looking ahead, IADS said 2025 to 2026 will be “even more volatile.” The U.S.’ ever-changing tariff “policy whiplash…has made long-term forecasting difficult, forcing retailers to sacrifice growth in favor of resilience.”
The group did note the current conflict in the Middle East and its impact on logistics, energy prices and inflationary pressures has “threatened the fragile consumer confidence.”