Retail Store Closures Are Coming Fast—Here’s How to Protect Your Supply Chain

February 3, 2026

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Retail Store Closures Are Coming Fast—Here’s How to Protect Your Supply Chain

The retail landscape is contracting at an unprecedented pace, and suppliers face mounting pressure as major chains scale back their physical footprints.

What happens to your margins when your largest customers suddenly disappear?

The Numbers Tell a Stark Story

The US retail sector closed approximately 15,000 stores in 2025, more than double the 7,325 closures recorded in 2024, according to Coresight Research.

While 2026 shows signs of stabilization with 566 planned closures against 1,118 openings so far, industry analysts project the year will still see roughly 7,900 closures versus 5,500 openings.

The scale extends across household names:

Macy’s announced plans to close 150 stores through 2026, with 66 shuttered in 2025 alone, reducing the company to approximately 350 locations as it pivots toward e-commerce.
Kroger and Saks Off 5th are pursuing similar strategies, contributing to over 300 combined closures.
Party City liquidated all 700 locations.
Rite Aid shuttered 1,300 stores amid bankruptcy proceedings.

Coresight CEO Deborah Weinswig identifies pharmacy chains as particularly vulnerable, noting that Walgreens and CVS face mounting pressure from high operating costs and dependence on low-margin pharmacy sales.

The shift reflects a broader transformation driven by:

e-commerce dominance
inflation pressures
the reality that many retailers overexpanded during previous growth cycles

The Supplier Squeeze

Store closures create immediate cash flow disruptions for suppliers. When a major retailer reduces its footprint, purchase orders shrink or vanish entirely, often with minimal warning.

A Midwest apparel manufacturer learned this firsthand when a department store chain canceled $2.3 million in spring orders just weeks before production began, leaving the supplier scrambling to repurpose inventory and cover fixed costs with no revenue offset.

The financial impact extends beyond lost sales:

Suppliers holding inventory for cancelled orders face write-downs or fire-sale liquidations.
Production schedules built around retailer commitments become liabilities when those commitments evaporate.
Contract renegotiations typically favor the distressed retailer, not the vendor.

Margin Compression Across the Board

Excess inventory from cancelled orders transforms into dead stock that ties up warehouse space and working capital. Fixed manufacturing costs remain constant even as revenue drops sharply.

Suppliers often accept steep discounts to move products through alternative channels, further eroding profitability. The timeline to replace major retail accounts stretches across quarters, not weeks, creating prolonged margin pressure.

Bankruptcy-driven closures compound these challenges. Big Lots’ financial collapse eliminated a significant outlet for home goods suppliers, compressing order volumes across an already-struggling category.

John Mercer of Coresight notes that while 2025 saw fewer bankruptcies than anticipated and muted tariff impacts, the industry still faces structural consolidation.

What Suppliers Are Doing Now

Manufacturers are diversifying customer concentration to reduce dependence on any single retail chain. Credit departments now monitor retail partner financial health more aggressively, adjusting payment terms when balance sheets deteriorate.

Direct-to-consumer channels and business-to-business relationships offer alternative revenue streams that bypass struggling traditional retailers.

Value-oriented chains present opportunities:

Dollar General plans 611 new stores in 2026 against just 271 closures, using artificial intelligence to identify responsive markets.
Aldi continues expanding its footprint, creating openings for suppliers willing to meet discount format requirements.
Department store suppliers are shifting product lines toward these growth channels.

The retail consolidation accelerating through 2026 marks a permanent shift in supplier–retailer dynamics, separating vendors who diversified from those who remained concentrated.