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Retail Shake-Up: Record Store Closures Expected in 2025 with Physical Stores Struggling

Brick-and-Mortar Retail Faces a Looming Crisis in 2025

Introduction

The retail sector has been grappling with challenges for years, and 2024 proved to be a particularly tumultuous year, with numerous bankruptcies and store closures. As we enter into 2025, the outlook for the industry remains grim, with experts predicting a further escalation in store closures.

A Year of Closures

In 2024, the retail landscape witnessed the closure of countless brick-and-mortar stores as several national chains struggled to keep their doors open. Walgreens, Red Lobster, Big Lots, and Family Dollar were among those that shuttered hundreds of locations. According to data from Coresight Research, U.S. store closures totaled 7,325 in 2024, the highest number since 2020.

Escalating Closures in 2025

Experts now predict that store closures will skyrocket in 2025. Coresight Research estimates that approximately 15,000 locations will close throughout the year, offset by only 5,800 stores set to open. This represents a staggering 334.3% increase in closures compared to 2024.

The decline is being driven by several factors, including:

  • Inflation: Rising inflation has put a strain on consumers, who are now more likely to prioritize necessities over discretionary purchases.
  • Online shopping: The growth of e-commerce has made it increasingly convenient for consumers to shop from home, reducing the need for physical stores.
  • Poor customer service: Retailers that fail to meet evolving consumer expectations for seamless and pleasant experiences will likely struggle.

High-Risk Categories

Coresight Research identified several categories that are particularly vulnerable to store closures in 2025:

  • General-merchandise discount stores (e.g., Dollar General, Big Lots)
  • Apparel (e.g., Macy’s, JCPenney)
  • Department stores (e.g., Macy’s, Sears)
  • Craft stores (e.g., Joann)

Joann’s Closure Underscores the Crisis

Joann Fabrics’ announcement that it will close over 500 of its stores is a stark illustration of the challenges facing the retail industry. Deborah Weinswig, CEO of Coresight Research, described the move as a reflection of a broader "retail reality" of escalating store closures in 2025.

Adapting to Survive

Despite the dire outlook, Weinswig emphasized that there is still hope for physical retail. However, she stressed the need for retailers to adapt to today’s consumer. This includes:

  • Embracing technology to optimize prices and customer service
  • Reducing friction in the shopping experience
  • Offering a seamless and personalized experience

A Shake-Up and Revolution

Weinswig believes that we will see a significant shakeup in the retail sector in 2025, with companies reassessing their strategies and embracing radical thinking to win and keep consumers. She cited JCPenney’s partnership with SPARC Group as an example of this type of innovative approach.

Conclusion

The retail industry is facing an unprecedented crisis in 2025. Store closures are expected to skyrocket, with general-merchandise stores, apparel brands, and department stores particularly at risk. Retailers that fail to adapt to changing consumer expectations and embrace new technologies will likely face an existential crisis. However, there is still hope for physical retail, provided that businesses are willing to revolutionize their store environments and deliver a seamless and personalized experience to their customers.

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