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January 24, 2025
Are More Store Closings Than Openings in Retail’s Future?
Coresight Research predicts a spike in store closings in the U.S. this year, representing the second consecutive year that closures outpace openings. The net increased closures were attributed to shifts to online shopping.
In 2024, U.S. store closures totaled 7,325, reaching the highest number of closings since 2020, the first year of the pandemic, according to Coresight’s findings. Openings reached 5,970, which still represented the highest number of openings since 2012 when Coresight began tracking opening/closing data.
For 2025, closings are predicted to more than double year over year to approximately 15,000. Openings are expected to remain about the same at about 5,800 this year.
Coresight said it already tracked over 2,000 planned closures year to date, including announcements from Party City, Big Lots, Kohl’s, and Macy’s. As of Jan. 17, major U.S. retailers have announced 29.6% fewer openings and 334.3% more closures compared to a year ago.
Coresight expects the closures in 2025 to fall into three categories:
- Liquidations resulting in all stores closing, such as Party City.
- Distressed retailers closing large swathes of stores, often under Chapter 11 bankruptcy restructuring, as with Big Lots.
- Legacy retailers reshaping their store footprints due to a “changed retail context,” as with Kohl’s and Macy’s.
Coresight said that consumers seeking savings amid inflationary pressures continue to drive e-commerce purchases.
“We continue to see a trend of consumers opting for the path of least resistance,” said Coresight’s CEO Deborah Weinswig in a statement. “Not only do they want the best prices, but they also have no patience for stores that are constantly disorganized, out of stock, and that deliver poor customer service.”
Weinswig urged retailers with stores to tap artificial intelligence and better optimize pricing to improve the in-store experience. She said, “We have seen Shein and Temu capture market share as consumers choose to shop online to save time, money, and avoid frustration.”
In April 2024, UBS retail analyst Michael Lasser predicted that about 45,000 stores would close in the U.S. in the next five years as online retail penetration increases to 28% by 2028 from 21% in 2023. As reported by Footwear News, Lasser also cited expected market share gains by Temu and Shein. “There will be just less need for stores,” he noted at the time.
Higher borrowing costs, rising wages, and consumers spending more on services were cited as other factors in the store closures.
Lasser still believes stores “remain an important part of the overall retail ecosystem” because they’re increasingly serving as fulfillment centers for online orders. He said, “This is increasingly more important as consumers are becoming more demanding for convenience or immediate deliveries.”
Brandon Svec, national director of U.S. retail analytics for CoStar Group, told CoStar News that Coresight’s estimates for 2025 store closings are much higher than most other forecasts.
According to Business of Home, Telsey Advisory Group recently predicted a 1.7% growth in net store openings in the U.S. for 2025 as positive growth in off-price, home, and dollar channels offsets declines in luxury and department stores.
The U.S. retail vacancy rate also remains a low 4.1%, according to CoStar data.
Svec told CoStar News last August, “It’s not, in my opinion, a resumption of the retail apocalypse that we saw in 2018, 2019, 2020 where we were seeing so many stores closed. There are still a substantial amount of tenants from a broad range of sectors looking for space. And the longer-term imbalance between the space needed in retail and the space that we have, I don’t think has shifted.”
Discussion Questions
Will store closings outpace openings in the years ahead?
What factors do you see accelerating or slowing closures as well as supporting openings?
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We obsess over store closings. However, stores closing down is not a new thing. Nor is it necessarily an unhealthy thing. While there is often a tragic human cost, it is right that the dead wood of retail is cleared away to make way for new concepts and better retail. This churn is natural and normal, and it is better than the alternative of stagnation. As for the future of stores, they are secure. For all the silly retail apocalypse headlines, sales through stores account for the vast majority of retail. And most shoppers, including younger shoppers, want and like to use stores.
I’d also add that some of this is cyclical. As far as retail volumes (not value) are concerned, we’ve just been through a more challenging time where retailers are trying to balance their own costs against virtually no volume growth. The weaker players have been found wanting and have lost out, so many are now shutting stores voluntarily or through bankruptcy.
Yep, no need to claim the sky is falling. A heathy culling and adjustment in retail, and a healthier economy will result soon again in an upswing of growth. It always does.
Let’s be clear. Deborah seems to obsess on store closings. And Coresight reflects her opinion because it grabs eyeballs. At the moment, the closings are weighted by companies that are unsurprising. I could tell a whole story of 2 of the chains that make up the bulk of this “story.” Nope
And Coresight’s simplistic metric of (gross) store counts does much to perpetuate misinformation: for decades, the trend in – say – grocery was to replace smallish stores with much larger ones; so if four 5K gsf stores are closed and replaced by a 25Kgsf one did retail “shrink”? Of course not.
Yes, exactly this! There is little nuance in the numbers.
Let’s face it — there are swaths of retail that just aren’t needed. Do we need office supply stores, for instance? Stores that sell commodity items without curation or differentiation will probably go the way of Sears. Stores that excite and delight have a much better chance of sticking around.
In many cases, a store closing is offset by a new retail concept opening in the same location. It’s not a hard-and-fast rule, but reinvention of retail space is a healthy thing.
The number of store closings will continue to moderately outpace openings for the next couple of years. More important than the store count will be the trends associated with what the store’s activity consist of. Physical retail locations will continue to be a very large and important component of retailer’s interaction with consumers. Additionally, the store’s roll will continue to increase as a fulfilment location and a jump off point for omni transaction and direct to consumer Clienteling as the influence of AI increases in this area. It is not all bad news for landlords, some had a good vision when creating long term leases so that the leases benefited them when a store ships a product to a customer even if it was sold on the web or in a different store.
There are plenty of people who love a store closing conversation. I, however, am not one of them. I thought while reading this article, here we go again with the sometimes gleeful talk of a retail apocalyspe. I appreciated Brandon Svec’s comment that “Coresight’s estimates for 2025 store closings are much higher than most other forecasts.” It’s nice to hear both sides. (Thanks for that, Tom.) Yes, consumers are dealing with disorganization on the sales floor and with poor customer service, but shopping in-store still outnumbers online.
Sector-specific weakness resulting from macroeconomic factors, namely the housing, furniture, and appliance markets, is partly responsible for store closures. There is still a lot of pressure in those sectors, but it has nothing to do with macroeconomics.
The closings of brick-and-mortar stores are also a consequence of poor merchandising, poor location strategies, and brick-and-mortar’s inability to compete with e-commerce.
Additionally, many retailers are relocating from regional malls, resulting in the closure of stores. By relocating from regional malls, retailers can take advantage of lower rental costs and access to new customer bases in untapped areas. This move also allows them to tailor their store formats to better suit local demands and preferences. Furthermore, it provides an opportunity to enhance their brand presence in strategically important locations.
But the key to reversing closings into openings at this point in time will be retail’s ability to adapt to personalization beyond what ecommerce can deliver.
Online commerce will continue to impact the # of stores negatively. Consumers, especially the ones in higher income brackets will benefit as this “store opening squeeze” will improve the quality of the remaining stores.
All in all, the natural cycle for retail brands is on a healthy journey of closures, re-sizing, downsizing, remodeling, and with fewer stores opening. Some of this is typical retail business culling, which is good.
Once we see the economy gain a little more strength in 2025-2026, retail growth will come naturally again, and overcome this drag in national consumer credit card debt, pesky inflation since 2021, and stale interest rates.
I can’t see this as a long term trend. Why? Humans are physical. I remember being told in 1998 that all retail would disappear in 10 years. Of course, that was based on a fantasy of the human virtual being. That fantasy doesn’t exist. That DOES threaten stores is their tendency to be distracted by the shiny baubles of tech which take them away from creating placed where physical human beings enjoy shopping so much the retailer is profitable. That is the only things that really matters.
What I can say is that the shift to online shopping isn’t slowing down, and rising costs like rent and wages are making physical stores harder to sustain. Many retailers are failing because they refuse to adapt with their disorganized stores, bad service, and outdated models that don’t cater to the needs today’s demanding shoppers.
To possibly slow closures, stores need to double as fulfillment hubs for online orders and focus on offering an experience that customers can’t get online. Times are changing, so honestly, unless the retailers embrace smarter tech and truly listen to what their shoppers want, closures will speed up.
Retail Darwinism is alive and well. Throughout 2025, store closings are predicted to more than double year over year to approximately 15,000. Store openings are expected to remain about the same at about 5,800 this year.
While plenty of attention is focused on store closures and the false narrative about the retail apocalypse, this is a natural occurrence in the retail industry as new innovative store concepts, experiences, and business models emerge to replace the old legacy retail models. Coresight Research attributes this to several factors, including store closures due to the impacts of supply chain disruptions, the continued dominance of Amazon and Walmart, inventory management challenges, and retailers’ inability to deliver outstanding experiences.
However, store closures outpacing the number of openings is expected. Consider the following before concluding that we are entering a retail apocalypse:
We are witnessing a natural and evolutionary process and a response to changing consumer behaviors. The over-expansionary period from the 1990s to the 2010s, when retail giants expanded their physical footprint to provide convenience and value, had its place. However, as with anything in life, the most constant thing we must deal with is change. New and innovative concepts will continue entering the picture, and the old legacy models will fade. By no means is this an apocalypse.
Factors accelerating store closures include economic pressures and retailers’ lack of agility as consumers’ needs shift. Factors supporting store openings include alignment with consumer needs like value for money (Walmart), travel growth (WHSmith) and rural demand (Tractor Supply).