Department Store Retailing Remains a Bright Spot in Mexico vs. the USA

Department stores have long been iconic players in global retail—but their relevance and resilience vary greatly by region. In the United States, these stores continue to face declining foot traffic and fierce digital disruption. In Mexico, as we witnessed on our recent visit, department stores remain vital to the retail ecosystem, thanks to strong brand identity, financial service integration, and regional adaptation. Leading the way are El Palacio de Hierro, Liverpool, Coppel, and Grupo Comercial Control—a stark contrast to the struggles of U.S. brands like Macy’s, Sears, and Kohl’s.

Photo Credit: McMillanDoolittle

U.S. department stores continue to lose market share to e-commerce, specialty retailers, and off-price chains. Flagship names like Macy’s and JCPenney have closed hundreds of locations in recent years, while Sears has virtually disappeared.

Kohl’s stands out as a unique case. Targeted toward middle-income families, Kohl’s has fought to remain relevant with moves like partnerships (e.g., Amazon returns), off-mall locations, and activewear expansion. Despite these innovations, the brand struggles with leadership issues, identity and foot traffic, caught between declining traditional department store formats and rising competition from discounters like Target and online players like Amazon and Shein.

Mexico’s Model: Anchored and Adaptive

In Mexico, department stores thrive through smart localization, trusted financial services, and consumer loyalty built over decades. The country’s leading chains have carved out differentiated strategies that still resonate strongly with both urban elites and rural working-class shoppers.

Photo Credit: McMillanDoolittle

El Palacio de Hierro: Luxury and Experience

El Palacio de Hierro is Mexico’s benchmark for high-end retail. Its flagship store in Polanco, Mexico City, rivals luxury shopping districts in global capitals. With curated luxury assortments and immersive brand environments, Palacio remains aspirational yet culturally rooted—a combination that has eluded many U.S. luxury players.

Photo Credit: McMillanDoolittle

We had a chance to visit their flagship location earlier this month to experience this beautifully designed store.   Each floor of draws inspiration from different historic neighborhoods and landmarks of Mexico City. The ground floor, filled with luxury boutiques and a revolving pop-up section, illustrates the elegance of the historic road Paseo de la Reforma, featuring elements reminiscent of the Cuauhtémoc roundabout, Diana the Huntress Fountain, and the Angel of Independence.

Liverpool: The Trusted National Anchor

Liverpool continues to expand through a multi-format strategy, including department stores, specialty concepts such as Suburbia, and real estate development. Its private-label credit card is widely used, allowing it to tap into consumers underserved by traditional banks—a model largely absent in the U.S.

Coppel: Credit for the Masses

Coppel combines a department store model with financial inclusion, offering credit for furniture, clothing, and electronics to value-conscious consumers across Mexico. With over 1,600 stores, Coppel thrives in secondary and rural markets, where its financing model is a critical differentiator.

Grupo Comercial Control (Del Sol and Woolworth): Regional Resilience

Grupo Comercial Control operates Del Sol and Woolworth, chains that focus on middle- and lower-income families with broad assortments and affordable pricing. These stores emphasize accessibility and regional familiarity. Their low-frills, volume-driven approach is similar to old-school U.S. department stores.

In Mexico, department stores remain dynamic, relevant, and profitable. The mix of localized merchandising, store credit, and multi-format presence is a model of strategic adaptation.  Mexico’s retail success stories offer valuable insights: Know your market, build financial trust, and evolve formats without abandoning your core identity.  As American department stores continue to search for a revival formula, they might look south for inspiration.