American retail landscape has seen a significant shift into 2024 as major retailers have strategically decided to close several of their brick-and-mortar stores across the United States. This trend is driven by the need to streamline operations and reduce costs in response to various challenges, including increased online competition, changes in consumer behavior, and other economic pressures.
Despite the wave of store closures, the National Retail Federation (NRF) forecasts a growth in US retail sales between 2.5% and 3.5% for 2024, albeit slower than the previous year. However, January retail sales have declined, with a 0.8% drop marking the biggest fall since March 2023.
The decision to close stores can have far-reaching consequences, potentially harming a retailer's reputation and customer goodwill. Forbes reports that after closing a store, retailers can lose nearly 12% in online sales in the local area, with fashion retailers experiencing even greater losses. This phenomenon, known as the horn effect, contrasts with the halo effect observed when new stores open and boost online sales.
1.Best Buy
Best Buy, the well-known electronics retailer, has revealed plans to close 10 to 15 stores by 2025. This decision follows the closure of 24 stores in the previous fiscal year. The company is undertaking a strategic shift to enhance the customer experience by transitioning from larger stores to smaller, more vibrant layouts in markets where it currently lacks a physical presence Best Buy's CEO Corie Barry has indicated that these closures are part of a rigorous review process as store leases come up for renewal. Factors such as consumer spending habits, a decrease in product innovation during the pandemic, and supply challenges have influenced Best Buy's decision-making. As of now, Best Buy operates 1,050 stores within the United States, with California hosting the highest number at 145 locations.
2.Walmart
Walmart, a leading global retailer, has shuttered 6 of its stores so far this year, with closures affecting 2 locations in California, one at 4080 Douglas Blvd in Granite Bay and another at 2753 Eastland Center Drive in West Covina. Next, Maryland located at 1238 Putty Hill Ave in Towson. Additionally, closures have occurred in Ohio and a pair of stores in San Diego. In the case of the San Diego locations, the inability to meet lease renewals with property managers was also cited as a reason for the closures. Factors leading to these closures include historical and current financial performance, with the company aiming to shut down underperforming locations that do not meet their financial expectations.
3.Dollar Tree and Family Dollar
Dollar Tree, which also owns Family Dollar, is another prominent name making substantial cuts. The company announced the closure of 600 Family Dollar stores in the first half of 2024, with an additional 370 set to close upon lease expiration. Dollar Tree, which acquired Family Dollar in 2015, will also close 30 stores. The closures are attributed to years of mismanagement, poor store conditions, and competition from other discount retailers like Dollar General and Walmart. Inflation has further impacted Family Dollar's customer base and profits. The closures are expected to leave gaps in communities that already have limited shopping options.
4.Macy's
Macy's, the iconic department store chain, is not immune to these changes. It plans to shut down approximately 150 "underproductive" U.S. stores through 2026, including 50 locations in 2024. Early in the year, Macy's will close stores in Arlington, Virginia; San Leandro, California; Lihue, Hawaii; Simi Valley, California; and Tallahassee, Florida. Macy's strategy includes enhancing the shopping experience at its remaining stores and expanding its luxury brand presence with new Bloomingdale’s and Bluemercury locations.
5.Foot Locker
Foot Locker has also revealed plans to close more than 400 low-performing stores in shopping malls by 2026, shifting focus to better-performing sites and new concept stores catering to specific consumer niches. The company plans to close more than 400 low-performing stores in shopping malls through 2026, with a focus on closing 25% of its locations in A- and B-rated malls and 50% of its stores in C- and D-rated malls.
6.Big Lots
Big Lots is also reducing its physical presence, closing at least 50 locations in 2023 and planning further closures in New York, North Carolina, and Illinois. The company's CEO, Bruce Thorn, attributed these difficulties to a challenging macroeconomic environment and weather challenges that occurred in January. Additionally, the discount chain closed over 50 stores throughout the U.S. last year, with closures continuing into 2024. Experts have expressed concerns about the future of Big Lots, describing it as "very concerning." The primary customer base of Big Lots, which consists of low-income consumers, has been hit particularly hard by historically high inflation, further contributing to the company's declining sales and subsequent store closures.
7.The Body Shop
The company announced it would be shutting down all U.S. stores and has already closed its website to new online orders. The Body Shop, a British beauty and cosmetics chain, ceased its U.S. operations on March 1, 2024, and announced the closure of dozens of locations in Canada. The company's financial struggles were significant enough that its U.S. arm was told it would not receive any funding to continue operations or conduct an orderly winddown. This lack of liquidity meant that The Body Shop could not sustain operations past the beginning of March 2024. In the UK, The Body Shop also planned to close 75 shops and cut 489 jobs as part of its restructuring efforts.
8.Outdoor Voices
The athleisure clothing chain announced it would close all its stores over a weekend in March 2024 and transition back to an exclusively DTC, online business model. The brand initially expanded its distribution by taking its products offline to acquire new customers through stores in major U.S. cities. However, like many digitally native brands, Outdoor Voices faced the need to adapt its business strategy, which led to the decision to shutter its physical locations.
9.Forever 21
Forever 21 has continued to close stores this month including the one at Westfield shopping center, and three Forever 21 stores in Kansas City, Kansas, are also closing down. The fashion retailer known for its trendy offerings, has faced its own set of challenges leading to store closures in the US. The brand filed for bankruptcy in 2019 due to rapid expansion, increased competition, and a failure to adapt to shifts in consumer attitudes towards fast fashion and sustainability. Despite efforts to revitalize the brand, including a partial acquisition by Shein and ownership changes involving Sparc Group and Simon Property Group, Forever 21 has struggled to maintain its large retail spaces amid declining sales. It continues to close stores in mall locations across the US.
Other Retailers
Party City, CVS, Target, Burger King, Boston Market, Walgreens, Starbucks, Godiva, The Children’s Place, and Hardee’s are among other brands that have either already closed stores or are in the process.
These closures reflect a broader trend in the retail industry as companies adapt to a rapidly changing market. Factors such as the rise of e-commerce, remote work, hiring difficulties, and concerns over crime and public safety have all been cited as reasons for reducing physical storefronts. Some retailers also explore new store formats and experiential offerings to attract and retain customers.
