Store closings may accelerate as retailers face problems far beyond tariffs

Brick-and-mortar retail had a tough year last year, and it’s only going to get harder in 2025, experts say.

Retail data firm Coresight Research projects 15,000 stores will close this year, about double last year’s figure, which was the highest since the start of the pandemic. Retailers have already announced more than 2,000 closures this year, said John Mercer, Coresight’s head of global research.

The United States has several hundred thousand retail establishments—Coresight’s most recent count, from 2022, found about 800,000 across the country.

Bankruptcies, liquidations or chains leaving unprofitable locations will be the catalyst for most stores closing, Mercer said, as consumers seek out stores that offer better deals and a smoother shopping experience.

But retailers also face other obstacles. Some are still adjusting to a post-pandemic environment, while others grapple with the ripple effects of high interest rates and a slowdown in home sales, experts said. And President Donald Trump’s tariff policies could force stores to raise prices even as customers focus on discounts and value shopping.

“It’s a time of disruption and dislocation in retail,” Mercer said.

Some sectors are struggling with a comedown from the pandemic, when consumer spending rose and leases for retail space were discounted, said Mark Cohen, former director of retail studies at Columbia Business School.

“Now, they have been kneecapped by the customer not shopping with abandon,” Cohen said. “And when they are, they’re doing it online. The store-based productivity has declined—they are getting crunched.”

The more vulnerable sectors include hobbies and crafts retailers, as well as middle-market apparel sellers, said Brandon Svec, the head of U.S. retail analytics at CoStar Group. Home goods stores also face challenges, Svec said, because a sluggish housing market decreases consumer demand for new refrigerators, couches and large TVs. And high interest rates are dissuading lower-income consumers from making big-ticket purchases on their credit cards, Cohen said.

These categories are also among those facing tougher competition from e-commerce sites such as Shein and Temu, and retail behemoths Amazon and Walmart. Strained by still-high grocery prices and frustrated with their toothpaste and laundry detergent now locked up by many retailers who worry about theft, consumers are looking to cheaper and more convenient alternatives online. (Amazon founder Jeff Bezos owns The Washington Post.)

“Who wants to go shopping for things in a store when there’s this added inconvenience of getting someone to unlock a shelf?” Cohen said. “It’s probably cheaper for them to order it online anyway and have it on their doorstep the next day.”

Now Trump’s new trade policies loom as an added burden. The president’s new tariffs of 25 percent on imports from Canada and Mexico, and an additional 10 percent atop existing levies on Chinese goods, threaten to ignite a trade war. Although the president quickly postponed the Mexican and Canadian actions for 30 days, the long-term threat remains, leaving many retailers to weigh raising prices. That could risk alienating shoppers, or force companies to absorb the higher fees, shaving down their already slim margins.

Small- and medium-sized retailers are especially vulnerable because they have less leverage than big-box chains when it comes to pressuring suppliers to absorb the added cost of tariffs, said Maggie Barnett, the chief executive of LVK, a third-party logistics company.

Meanwhile, value is more important than ever to shoppers, which could hurt retailers who can’t meet the low-price demands. In its 2025 retail forecast report, accounting and consulting firm Deloitte suggested retailers must adapt as shoppers across income brackets focus on “more affordable brands” and discounters. The shift is creating a “loyalty crisis of sorts,” the report says, as consumers prioritize price over all else.

In-store struggles

The gloomy forecasts for this year come after a difficult 2024 for brick-and-mortar retail. Closures in 2024 reached 7,325, the highest number recorded since 2020, when Coresight tallied nearly 10,000 stores.

Bankruptcies and liquidations are major drivers of store closings. Including car dealerships and auto brands that sell directly to consumers, Coresight recorded 51 bankruptcies in the retail sector last year, double the figure from 2023. Among the notable names: Rite Aid, which filed for Chapter 11 in 2023 and emerged from it in September, closed 408 stores; and Conn’s closed 553 stores as part of its liquidation.

The numbers are already piling up for 2025, with more closings from Big Lots, Party City, Kohl’s and Macy’s.

But not all closures are a sign of a deeply troubled retailer, said R. J. Hottovy, head of analytical research at Placer.ai. Some of it, he said, merely reflects a change in strategy.

“In a lot of these cases, businesses are just adjusting,” he said. It’s common for major chains to cull underperforming stores “and maybe they plan to reopen in a different market, or maybe it’s a case where you don’t need the same size of store anymore.”

Last year, Best Buy, Nordstrom, Macy’s and Target announced they were investing in small-format stores as they try to cut costs while answering customers’ demand for convenience.

Many consumers still like to shop in person. Major retailers opened 5,970 stores in 2024, driven by discount stores, apparel, footwear and accessories retailers and convenience stores. Dollar General and Dollar Tree continue to expand rapidly, opening almost 1,300 stores collectively.

Mercer expects value retailers will continue to thrive in 2025. Aldi alone could open 170 locations. Off-price retailers like T.J. Maxx, HomeGoods and Marshalls will likely grow their store footprints as they continue to “resonate with consumers.”

Plus, the boost for discount, value and off-price retailers could have staying power, Mercer said. When there’s inflation and economic uncertainty “consumer behaviors get shocked and they turn to discount and value,” he said. “Not all [shoppers] revert back when the economic outlook improves.”

Coresight projects the number of openings in 2025 will dip 2 percent from last year. But the year is off to a strong start, with more than 1,000 store openings announced by Jan. 10. That includes new locations for Burlington, JD Sports, Barnes & Noble, Pandora and dollar stores. European retailers including Mango and Primark are also expanding in the United States.

“I do believe brick and mortar will always be successful,” Cohen said. “But it’s not ubiquitous as it once was.”