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Major U.S. Retailers Announce 334% Increase in Store Closures, as Private Equity Reshapes the Market
According to recent reports from Coresight, a leading advisory firm on retail and technology trends, retail closures are expected to spike to approximately 15,000 stores in 2025. Research cited by Newsweek says that 2025 will see a 334% increase store closings, based on U.S. retailer announcements so far. The closings are driven by weak consumer demand, inflation, and investor expectations inside an increasingly unforgiving business environment. “Inflation and a growing preference among consumers to shop online to find the cheapest deals took a toll on brick-and-mortar retailers,” said Coresight Research CEO Deborah Weinswig. Beyond consumer preferences, a rising trend in private equity is emerging - as investors don’t want to salvage struggling businesses in the retail sector, turning to closings and bankruptcy as a solution for excessive debt. The Private Equity Stakeholder Project (PESP) shows that private equity firms played a role in 65% of the largest corporate bankruptcies in 2024 (these are companies with debts in excess of $1 billion).
Retail stores are closing. Here's why.
Retail closings totaled 7,325 in 2024, the highest number of shutdowns since the pandemic. Companies like Joann Fabrics (800 stores closing) join 99 Cents Only and Rite Aid stores in using Chapter 11 bankruptcy protection to restructure operations. Major department store chain Macy’s will close 66 locations in 2025, part of a shutdown of 150 stores over the next three years.
Industry-wide, if 15,000 retail locations shutter in 2025, it will mark one of the most turbulent periods in recent history. Private equity firms, once seen as potential saviors for struggling retailers, are increasingly walking away from turnaround deals when profitability doesn’t materialize quickly enough. Experts say that this pursuit of profitability harms the financial stability of local communities as well as the livelihoods of employees. But if the market doesn’t bear the desired goal, what’s a PE firm to do?
The Rise in Retail Store Closures: Private Equity Plays a Role
This wave of closures extends beyond small retailers; major chains (like Macy’s) are also struggling. A combination of reduced foot traffic, online competition, and high-interest debt has left many companies vulnerable. In some cases, private equity investments have exacerbated the problem, prioritizing short-term gains over long-term sustainability.
But consumer preference also plays a huge role in how retail stores perform. Customers want the best prices, and the biggest selection, often turning to online retailers as an alternative. “We have seen Shein and Temu capture market share as consumers choose to shop online to save time, money, and avoid frustration,” says Coresight CEO Weinswig. "Retailers need to embrace technologies like artificial intelligence to deliver a better customer experience and to optimize pricing to remain relevant and avoid ongoing closures.” Interesting idea. But if the balance sheet doesn’t support continued investment, how is ChatGPT going to change that outlook? Private equity is focused on the numbers - the customer experience is a part of the picture, but not what drives investors.
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