I haven't been to a department store in ages that was impressive. Even the ones that I grew up believing were high-end are are dirty, disorganized, and cavernous feeling these days. Worst of all, they are not meeting my needs for really anything that would cause me to choose shopping there vs. online.
Bring me designer look-books on vertical touch screens near every collection display. Show me how different pieces work together on different body types. Help me build a capsule collection on my own, then print out a "shopping list" of items and sizes for a sales clerk to gather up for me while I sip a glass of water and rest my feet. Install flattering lighting in the dressing rooms and wherever a mirror can be found; use sound and audio to create a pleasing, vibrant atmosphere.
When it's sale time, don't make me feel like I am shopping at a bargain basement just because you are offering your goods at a discounted price. Help me feel that I am getting a deal by emphasizing the value of what I'm getting — the 50% discount isn't as wonderful if the garments are all jammed together and falling off their hangers. When the clothes are well-displayed, I will feel better about buying them (at any price) and will keep coming back and/or spending more!
Department stores don't have to die, but until they figure out their inventory control and how to offer exclusive feeling experiences, their future isn't so bright.