"Department stores are getting a bad rap," said our analyst Suzy Davidkhanian on a recent episode of "Behind the Numbers." "The way that department stores were structured as this one-hit wonder shop where you could find every single thing under one roof is a fallacy."

Department stores are in a tough spot, as Hudson BAy’s recent bankruptcy shows. But ones that embrace new kinds of experiences, like the newly opened Printemps luxury department store in New York City's Financial District, might have the right idea for the future of department stores.

High-end thrives while mid-tier struggles

Department stores aren't all failing—their success largely depends on positioning and purpose. In the US, luxury department stores like Bloomingdale's continue to attract crowds, while mid-tier retailers like JCPenney and Lord & Taylor struggle to differentiate themselves.

"It's that mid-tier having a tough time, because they don't really stand for something," said Davidkhanian, explaining that the mid-level shopper, already financially strained, questions why they should shop at these stores when retailers like Walmart offer similar merchandise at lower prices.

And mall-based stores have challenges as well.

"A lot of the department store brands are doing strip mall and different configurations…versus the fleet of stores that are typically in a mall," said Davidkhanian. And as malls face decreased foot traffic, the department stores that were typically malls' anchor stores might suffer as well.

Exclusivity is essential for survival

If a department store doesn’t have exclusive merchandise, consumers will simply browse in-store and purchase online at the lowest price point, said our analyst Sara Lebow.

"If you do not have unique-to-you brands, whether it's private label or market brands that are not being sold elsewhere, then you're going to lose," said Davidkhanian. Many department store retailers still struggle to create authentic online experiences that connect with their physical stores.

The size of department stores also works against them. "The cost of running those stores versus the profitability is also something that's really tricky to maintain at the moment," said our analyst Carina Perkins in the episode.

Printemps NYC: A new department store model

New York's new Printemps store is taking a new approach to the format. It favors experience over merchandise density.

All photo credits: Printemps Groupe

"It's a very majestic store. It's in a historic area, in an iconic building, and it felt so airy and a little bit like 'Alice in Wonderland' in terms of the fixtures, the mirrors, the way that the fitting room was done," said Davidkhanian, who visited the store recently. "There was so much space, which also meant that there wasn't a lot of merchandise."

Rather than maximizing sales per square foot—a metric Davidkhanian suggests is "probably a thing of the past"—Printemps focuses on creating a destination.

The store features: four different bars with premium drinks, coffee shop, a spa area offering facials, carefully curated merchandise with limited SKUs, a "Nike residency" featuring exclusive products, and cross-merchandised displays rather than traditional departments.

As for in-store technology, "We saw nothing," Davidkhanian said."We saw one QR code."

Listen to the full episode.

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