A steady increase of Store closures in the United States is expected to persist in 2025 as legacy companies face relentless competition from e-commerce platforms Shein and Temu.

Coresight Research, a retail and technology firm, estimates that closings will increase to 15,000 by 2025. The firm also expects about 5,800 store openings nationwide this year, but it is a net loss.

With a wave of bankruptcies and announced closings in 2024 from big brands like Big Lots, Party City, and recent announcements from Kohl’s and Macy’s that extend into 2025, Coresight Research estimates that more than 1,900 store closings are expected by the second week of 2025 .

To put that into perspective, 7,323 stores closed in 2024, the most closures since 2020, when nearly 10,000 stores closed, according to Coresight Research.

That was an increase of nearly 60% compared to the same 52-week period in 2023.

TRADE CLOSURES IN THE MINISTRY AT THE HIGHEST SINCE THE PANDEMIC

John Mercer, head of global research at Coresight, told FOX Business that the same issues plaguing the industry will persist in 2024, “specifically competitive pressures” from fast fashion platforms that have risen to prominence in recent years as a inflationary consumers they took advantage of their cheap prices.

Shein and Temu offer a range of products and clothing at low prices. Companies face criticism over labor practices, environmental concerns and business ethics, such as intellectual property infringement.

Sale and store closing signs at a Macy’s store in the Brooklyn borough of New York, USA, on Tuesday, January 14, 2025. (Yuki Iwamura/Bloomberg via Getty Images)

Still, people continue to shop on the platforms, making them a threat to U.S. retailers.

“We believe Temu and Shein together worldwide are effectively a $100 billion threat to retailers,” Mercer said. “We think they did about $100 billion in global sales last year. The vast majority will be pulling out of legacy retailers … taking sales, taking market share at their expense,” Mercer continued.

Coresight believes that “the threat of Temu and Shein is an under-recognized pressure on many retailers” and that “there is little chance that this competitive pressure will abate,” according to Mercer.

Another factor contributing to its estimate is the upcoming period of “policy disruption,” according to Mercer.

WHY ARE NEIGHBORHOOD PHARMACY CLOSED

“We’re still not sure what’s going to happen with the tariffs. We’re not sure how the tariffs would flow to the costs of retailers, domestic consumers and how consumers would react to that,” he said.

Mercer said the risk with tariffs is that “you end up with escalating inflation.”

A shopper walks into a Party City store in Richmond, California, US, on Thursday, December 26, 2024. (David Paul Morris/Bloomberg via Getty Images/Getty Images)

“We saw how badly US consumers reacted the last time there was an increase in inflation. The risk is that we have more inflation and consumers respond in the same way again,” he added.

Tariffs aside, positive trends in Coresight Research’s consumer sentiment metrics and upbeat macroeconomic indicators suggest consumer demand could be reasonably strong, according to Mercer. But even if demand is strong, the “risk for legacy retailers is that, as I mentioned, consumer demand is increasingly directed at new players.”

MACY’S ACCELERATES STORE CLOSING THIS YEAR

Coresight Research CEO Deborah Weinswig said in a statement that inflation along with a “growing preference among consumers to shop online to find the cheapest deals” plagued many brick-and-mortar retailers last year.

Sale signage outside a Macy’s store in the Brooklyn borough of New York, USA, on Tuesday, January 14, 2025. (Yuki Iwamura/Bloomberg via Getty Images)

Several brands were victims, among them American cargowhich announced it was closing all 329 locations as part of its parent company’s bankruptcy proceedings, and Big Lots filed Chapter 11 bankruptcy protection in September to help facilitate the sale of “virtually all” of its assets to its “stalking horse bidder” Nexus Capital Management. It also announced plans to permanently close dozens of stores.

Macy’s also began closing locations as part of a turnaround strategy announced in February 2024. Its CEO, Tony Spring, told analysts during a recent earnings call that the company now expects to close about 65 locations this year, more than its previously announced forecast of 50. at the beginning of the year.

GET THE FOX BUSINESS ANYWHERE CLICK HERE

Party City, with 738 expected closings, and Big Lots, with about 661 expected closings, lead the closing pack so far this year. 7-Eleven is not far behind with 333 planned closings.

Coresight also tracked the expected closings of Aldi, CVS Health, Dollar General, Dollar Tree, Family Dollar, Five Below, JD Sports, Kohl’s, Macy’s, The TJX Companies and Walgreens Boots Alliance.

However, most of the companies mentioned are opening locations simultaneously throughout the year.

Mercer said it’s important to recognize that there are three categories of retail closing activity. In one case, retailers may be closing all stores because they are liquidating their assets. There are also distressed retailers that are restructuring and closing large stretches of stores, but not necessarily all.

The third type of closure is when legacy retailers recognize that they need to reshape their estates to better serve changing consumer preferences.