The year 2025 has been particularly harsh on physical retail stores. With economic challenges and shifting consumer habits, many businesses are struggling to keep their doors open. The increasing preference for online shopping has made it even harder for traditional retailers to stay afloat.
The E-Commerce Shift: A Challenge for Physical Stores
The rise of e-commerce has changed the way people shop. Instead of visiting stores, customers now prefer the convenience of online shopping, which offers competitive pricing, doorstep delivery, and hassle-free returns. This shift is not temporary; it continues to grow as technology advances.
One of the hardest-hit sectors has been department stores. With large spaces, high operational costs, and declining foot traffic, these stores are facing severe financial challenges. However, instead of giving up, some brands have tried to adapt.
Macy’s Tries a New Strategy But Still Faces Closures
Macy’s, one of the most well-known department store chains, has attempted to change its business model to keep up with the times. They introduced Macy’s Backstage, a smaller-format store that offers discounted brand-name fashion, beauty products, home goods, and accessories. These stores are typically located inside existing Macy’s locations, with separate signage and checkout areas.
Macy’s Backstage offers discounts of 20-80% compared to regular department store prices. However, despite this effort, many Macy’s stores are still underperforming, leading to closures.
Macy’s Chairman and CEO, Tony Spring, commented on this move:
“Closing any store is never easy, but as part of our Bold New Chapter strategy, we are closing underperforming Macy’s stores to focus our resources on locations where customers are responding positively.”
As part of this strategy, Macy’s has announced the closure of 66 stores, including a major location in Brooklyn.
Major Retail Chains Closing in 2025
Macy’s is not the only major retailer struggling. Many well-known brands have announced closures this year. Here are some of the biggest names affected:
Advance Auto Parts
Advance Auto Parts has announced a strategic plan to restructure its business, which includes:
- Closing 523 corporate stores
- Exiting 204 independent locations
- Shutting down four distribution centers
The company aims to consolidate its distribution centers into 13 large facilities by 2026.
Best Buy
Best Buy has been closing stores gradually, avoiding major announcements. In 2024, the company shut down 24 stores, and reports indicate that another 10 to 15 locations will close in 2025.
Big Lots
Big Lots narrowly avoided complete shutdown after being acquired out of bankruptcy. While some locations remain operational, others are being transformed with a new business model that focuses less on furniture.
McDonald’s CosMc’s Locations
McDonald’s launched a spinoff brand called CosMc’s, which primarily sells beverages and quick bites. However, three of these experimental locations are already set to close. Despite this, McDonald’s still plans to open additional CosMc’s locations in smaller buildings later in the year.
Denny’s
Denny’s, one of the largest full-service restaurant chains, is also struggling. The company planned to close 50 locations by the end of 2024, and an additional 100 restaurants are scheduled to shut down in 2025.
Dick’s Sporting Goods
Dick’s Sporting Goods is also feeling the pressure, with 35 store closures planned for 2025. Although the brand is not shutting down entirely, these closures indicate the financial struggles it is facing.
Why Are These Stores Closing?
Several key factors contribute to the decline of these physical retail stores:
- Growth of E-Commerce – Online shopping platforms like Amazon, Walmart, and Shopify have taken a significant share of the market.
- High Operational Costs – Maintaining large retail spaces is expensive, and declining foot traffic makes it difficult to cover costs.
- Shifting Consumer Behavior – People prefer convenience and competitive pricing, which online stores offer better than physical ones.
- Economic Challenges – Inflation, labor costs, and supply chain disruptions make it harder for retailers to remain profitable.
Is There Hope for Physical Stores?
Despite these challenges, not all brick-and-mortar stores are doomed. Retailers that adapt to consumer preferences, offer unique in-store experiences, or integrate technology (such as AI and smart shopping) have a better chance of survival. Some brands are shifting toward smaller, more efficient store models to reduce costs while maintaining a physical presence.
Additionally, some retail categories—such as discount stores, secondhand shops, and specialized experience-driven stores—continue to perform well.
Conclusion: The Future of Retail in 2025
The retail landscape is changing rapidly, and businesses must innovate to stay relevant. While some brands are managing to adapt, others are forced to close their doors. The shift to e-commerce and smaller retail formats is likely to continue, and only time will tell which brands can survive this transformation.
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