Another No Good, Very Bad Year for Retail Stores

"There was no forever in store for Forever 21's US stores. The same goes for fellow bankrupt companies Joann Fabrics and Party City, which joined the fast-fashion brand in closing their brick-and-mortars over the past year. We experienced another slaughter for physical stores at large in 2025 as inflation and high operational costs ate away at profit margins and shoppers continued to purchase from their couches. Tween favorite Claire's, department stores Kohl's and Macy's, and discount retailer Big Lots were also victims."

"Next year looks a bit brighter on the macroeconomic front, thanks to projections of lower inflation, lower interest rates, lower unemployment and stronger GDP growth. But continued fragmentation in consumer behaviors may boost nontraditional players, says John Mercer, head of global research for Coresight. Think cross-border commerce like Temu and Shein, social commerce via Instagram and TikTok, and quick commerce platforms with lightning-fast delivery."

"Mercer says we can expect store closings to remain high and even increase if retailers face rising costs that they can't pass on without driving customers away. We're also about to see more AI-powered shopping agents. McKinsey predicts that by 2030, the US business-to-consumer retail market could see up to $1 trillion in revenue from agentic commerce. The Dollar Generals, Marshalls and Aldis of the world have less to fear. Successful value-positioned off-pricers, dollar stores and discount grocers will continue expanding, Mercer predicts."

Retailers announced over 8,000 US store closures in 2025, a 13.2% increase from 2024, alongside about 5,100 openings, 8% fewer than the prior year. Major chains including Forever 21, Joann Fabrics, Party City, Claire's, Kohl's, Macy's and Big Lots closed locations as inflation and high operational costs reduced profit margins while online shopping grew. Economic forecasts point to lower inflation, interest rates and unemployment in 2026, but fragmented consumer behavior benefits cross-border platforms, social commerce and quick-delivery services. Value-focused off-price, dollar and discount grocers are positioned to expand.

Read at The Daily Upside