In a striking shift within the retail landscape, projections indicate that 2025 will witness a dramatic increase in store closures across the United States. According to Coresight Research, the number of retail locations expected to shut down this year could reach a staggering 15,000, a significant jump from the 7,325 closures recorded in 2024. This surge not only marks a concerning trend for brick-and-mortar stores but also sets a new record, surpassing the closures seen during the pandemic in 2020.
Key Trends Shaping Retail Closures
Several factors are contributing to this upheaval in retail. Consumers are increasingly opting for online shopping, seeking convenience and competitive pricing. In fact, the Census Bureau reports that non-store retail now accounts for 29% of all retail sales, up from 21% just a few years ago. This shift has forced many retailers to reassess their physical presence, leading to widespread closures as they attempt to right-size their operations.
Major Retail Players in Decline
As closures soar, prominent retailers are announcing significant cutbacks. Notable among them is Party City, which plans to close 738 stores, followed closely by Big Lots with 601 closures. Other retailers like Walgreens Boots Alliance, 7-Eleven, Macy’s, and Kohl’s are also contributing to the growing list of shuttered locations. In contrast, some retailers are still pursuing growth, with Aldi leading the charge by opening 170 new stores this year.
Discount Retailers on the Rise
In response to inflation and changing consumer behaviors, discount retailers are thriving. Brands like Dollar Tree and Dollar General are not only surviving but expanding, with plans for new openings despite the backdrop of closures. This rise in discount outlets reflects a broader trend as consumers seek affordable options in the face of rising costs.
The Rise of E-Commerce
The sustained growth of e-commerce is reshaping consumer habits. With shoppers increasingly favoring the ease of online transactions, traditional retailers are finding it challenging to compete. Increased competition from online platforms, particularly those based in China like Shein and Temu, is further squeezing the market for mass merchants and category retailers.
Pharmacy Deserts and Home Retail Challenges
The retail sector is not just facing challenges in traditional stores. With CVS Health leading the way in pharmacy closures, the emergence of “pharmacy deserts” is becoming a concern. As more pharmacies close, consumers may find it increasingly difficult to access essential health services.
Meanwhile, the home retail segment has been hit hard over the past two years, with significant store closures. While no new closures have been announced this year, the impact of previous cutbacks lingers, leaving many consumers facing limited options.
Apparel Sector in Flux
The apparel industry is also experiencing significant changes, with a high turnover of stores. The sector saw a notable number of closures last year, driven primarily by bankruptcies. However, it also witnessed a substantial number of openings, particularly in off-price retailing, indicating a dynamic and evolving marketplace.
Consumer Spending and Debt Trends
As consumers navigate this shifting landscape, many are adopting more cautious spending habits. A growing trend known as “No-Buy” or “Underconsumption” encourages individuals to cut back on non-essential purchases and focus on paying off debt. With household debt reaching an all-time high of $17.94 trillion, including significant credit card and auto loan balances, this trend reflects a broader desire for financial stability.
While the retail environment faces considerable challenges, experts argue that the current wave of closures represents a necessary adjustment rather than a catastrophic decline. As retailers adapt to changing consumer preferences and economic pressures, the landscape will continue to evolve in unpredictable ways.
