At last month’s National Retail Federation (NRF) annual meeting, AI seemed to dominate the conversations. But the biggest future of retail story isn’t just about AI; it’s what retailers are doing with their physical footprints in real time. After a year forecast to include a 15,000-store-closure shockwave, the reality landed meaningfully lower, even as closures still rose versus 2024 and openings remained active.
To understand what’s happening to physical retailers, I spoke with analysts at Coresight Research about why closures fell short of the most aggressive forecasts and what the 2026 playbook looks like for investors, shoppers, and retail real estate.
Rieva Lesonsky: A lot of headlines predicted a 15,000-store-closure wave in 2025, but that didn’t fully materialize. Why did the most aggressive forecasts miss the mark? What forces helped keep retail from tipping into a full-blown washout?
Coresight: 2025 was an incredibly dynamic year with many moving parts.
- The growth of challengers such as Temu and Shein, which some companies cited as a factor in their bankruptcy filings early in 2025, was affected by changes to the de minimis thresholds.
- Consumer sentiment has been up and down according to Coresight Research data, but higher-income consumers’ sentiment was very strong for much of the year, and this cohort sustained total retail spending.
- Tariffs were on and off throughout the year.
- Retail bankruptcies were down versus 2024: Coresight Research tracked 32 major retail bankruptcies in the U.S. in 2025. In calendar 2024, we tracked 51 retail bankruptcies. These totals include automobile dealers and direct-to-consumer brands.
- Crucially, consumers (as a whole) kept spending, with retail sales growing solidly (year over year) each month, and well above retail inflation, reflecting real gains for retail. Higher-income consumers have supported this expansion, so retail gains have not been evenly felt.
Lesonsky: Closures still rose year over year, yet openings remained active. What does that tell us about how retailers are actually using physical stores today? Is this about survival—or something more strategic?
Coresight: Some retailers are focused on operating fewer, better stores, while many others are focused on operating more stores as they identify opportunities to expand their estates.
Some legacy formats continue to rightsize for a future with fewer stores:
In 2025, drugstores emerged as the leading contributor to store closures by sector, accounting for 24.7% of total closures. This was fueled by Rite Aid’s bankruptcy, but CVS and Walgreens together closed many hundreds of stores. This marked the first time since our data set began in 2012 that drugstore chains recorded the greatest number of closures among all sectors.
Department stores closed 117 stores in 2025—this is fewer than in some other sectors, but it has an outsized space impact. Macy’s plans to close dozens of underperforming locations as part of its strategy to reduce its store base while focusing more on profitable stores and digital channels. In the luxury department segment, Saks Global, which operates Saks Fifth Avenue and Neiman Marcus, has filed for bankruptcy and is undergoing restructuring, with selective closures expected across its stores. In the coming years, we expect to see an inexorable move toward a smaller, more concentrated department store sector.
Historically, the apparel and footwear sector has often closed the most stores each year, although that was not the case in 2025. The apparel retail market is fragmented, with a long tail of retailers whose performance may not match the solid sales growth seen among major specialty chains (such as AEO, Abercrombie, Gap, Urban Outfitters, and off-pricers).
Lesonsky: Which types of retailers proved most resilient in 2025—and why? Were there common traits among brands that avoided mass closures?
Coresight: Discount formats again led openings in 2025: Six of the 10 retailers opening the most stores last year were discount formats of some kind—Dollar General, Dollar Tree, Aldi, Five Below, Burlington, and TJX. The dollar stores can typically target small catchment areas, which means there is scope for expansion even though Dollar General (for example) already has more than 20,000 stores. Off-price is a growth segment, and is capturing share from midrange department stores and a long tail of specialty apparel retailers. We are seeing names such as Burlington, Ross, Ollie’s, and others snap up real estate as other retailers shutter stores.
Lesonsky: What surprised you the most about retail performance last year? Was there a moment when it became clear that the closure narrative was overstated?
Coresight: In most years, a majority of store closures are announced in the first half of the year. Since 2020, midyear totals have, on average, accounted for 58% of full-year closures and 80% of full-year openings, according to our research. However, we saw the closure percentage fall to an unusually low 40% in 2024.
In 2025, we saw a very large number of closures early in the year, including bankruptcies such as Party City and Big Lots. As a result, by midyear, we had tracked store closures (actual or planned) up 66.8% from the same point in 2024. The estimated square-footage increase was even greater—up 150% year over year, as of midyear 2025.
However, as of last July, we issued revised projections based on year-to-date actuals, which lowered the 2025 potential closures to an estimate of about 10,000.
Lesonsky: For 2026, where do you expect store closures and openings to trend next? Should we expect another reset—or a more measured evolution?
Coresight: In 2025, store closures were elevated, but overall the year was less negative for retail than it could have been, given tariff-policy volatility, variable consumer sentiment, concerns about inflation, elevated interest rates (with 2025 rate cuts beginning only in September), and reduced inbound visitor numbers. Overall, consumers continued to increase retail spending in real terms, and retail bankruptcies were down in 2025. As noted above, we recorded 32 retail bankruptcies (including automobile dealers and brands with a direct-to-consumer component) in 2025, compared with 51 in 2024.
2026 is widely expected to offer a better macroeconomic backdrop than 2025 for U.S. consumers, but in some areas—such as headline inflation and the housing market—the improvements may be incremental rather than dramatic. That means these drags on real consumer spending growth will persist into 2027, delaying an improvement in discretionary retail and categories such as home improvement.
We expect the trend of incremental improvement to be seen in store openings and closures, as positive trends are supported by a more favorable macroeconomic context, lower interest rates, and (later in the year) the annualization of 2025’s tariff impacts.
We estimate that chain retailers will close 7,900 stores in calendar 2026 (down by 4.5% vs. 2025), while 5,500 stores will open (up by 4.4% vs. 2025).
That equates to an estimated net loss of 2,400 stores for chain retailers in 2026 versus an estimated net loss of 3,000 stores in 2025. Our 2026 net closures projection is only about 0.3% of an estimated total of 914,446 retail stores in the U.S.
Lesonsky: For shoppers and local communities, what does this shift mean? How will these changes show up in how and where we shop in 2026?
Coresight: More choice at the value end of the market—off-price formats, discount grocery stores, and dollar stores will be within reach of many more consumers.
Fewer legacy formats, particularly midrange formats: Fewer drugstores, in the wake of Rite Aid’s closure and Walgreens planning to cull more stores; and fewer department stores as major chains contract.
Lesonsky: If there’s one takeaway you want people to understand about the future of physical retail, what is it? What’s the story we should be telling instead of focusing solely on closures?
Coresight: Contrary to some narratives that physical retail is in inexorable decline, the role and demands of a store are evolving, and those retailers that thrive will understand how to position their stores in that context. To put the data in context, estimated net store closures by chains for 2026 would represent less than half of a percent of all stores in the country.
The role of a store will change as digital commerce evolves, and how and where consumers shop changes.
Within discretionary retail specifically, we also continue to see relevance for the Coresight Research “BEST framework for physical stores”:
(B): Stores should be brand-building
(E): They should deepen engagement and drive traffic with experiences
(S): Stores should differentiate through service offerings
(T) Stores, which have long a “black hole” of data, should deploy technology to close the data gap with e-commerce (and in-store retail media will be one driver of this).
Elsewhere, where the quality of experiences or service may be less relevant, we see opportunities for retailers to tap demand for discount and convenience/immediacy.
We believe the further encroachment of digital retailing only deepens the need for retailers to evolve the role of the physical store to retain relevance.
Rieva Lesonsky is the founder of Small Business Currents, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
Photo courtesy Getty Images for Unsplash+
