What is causing so many stores to permanently close in 2025?

Store closures are expected to increase significantly in 2025, according to Coresight Research. What is causing this and what has been the trend in recent years?

Let’s first look at Covid and pre-Covid. In 2019, many store closures appeared to be caused by retailers rightsizing their real estate in the face of competition from online sales. Then the pandemic hit in 2020, reducing tenant sales and profits from temporary closings and declining patronage for most stores other than grocery stores, which resulted in tenant bankruptcies that led to many permanent store closures.

The period that followed led to a slowdown of store closures partly proppped up by federal stimulus pumped into the economy. Then in 2023, we started seeing a rise in store closures, likely caused by rising interest rates and a slowdown of housing sales because unaffordable mortgages led to less residential mobility, which in turn meant less demand for certain categories, such as home improvement and home furnishings.

Other trends also tend to affect tenant bankruptcies, downsizing or a slowdown in growth of physical stores by national chains.

For example, dollar stores were hit by inflation and have had to alter expansion plans. Dollar Tree Stores has closed almost 700 of its poorly performing Family Dollar stores, while 99 Cents Only Stores shuttered all locations.

A shift from casual restaurants to fast casual restaurants has resulted in some bankruptcies and real estate downsizing through closures, such as Red Robin, TGI Fridays, Denny's, Ruby Tuesday, Rubio's Coastal Grill, Hooters of America and Red Lobster.

Drug store chains have experienced declining reimbursement rates for prescription drugs, intense competition from online retailers like Amazon and changing consumer habits, which are leading to staggering store closures for chains like CVS Pharmacy, Walgreens, RITE AID and others. This is not a new trend. CVS, the largest U.S. chain, closed 244 stores between 2018 and 2020, and in 2021, it announced plans to close an additional 900 stores over several years.

Online banking has stalled the expansion of physical banks and the electrifying of automobiles will likely slow down the need for more gas stations.

Department stores, that is, the few chains that are left today, such as JCPenney, Macy's and Kohl's are rethinking their real estate strategy and are closing or downsizing their physical store footprint.

Conn’s Home Furnishings, American Freight Appliances & Furniture, Bob's Discount Furniture, HomeLife, Bed Bath & Beyond and other home furnishings chains contributed to stores closures in recent times.

Fast forward to 2025, the announcements of impending store closures from Macy's, Party City, JOANN Stores, Big Lots and others has led Coresight Research to predict that 15,000 locations could shutter in 2025. That would equate to a 55% increase over 2020’s count, and would more than double the total of store closures in 2024.