A darkened Dillard’s sign flickers above an empty mall corridor, its doors locked and display lights already shut off—one more anchor store erased in a year of rapid retail transformation. Shoppers drift past the shuttered entrance carrying no bags, just phones glowing with price-comparison apps. The quiet scene reflects only the beginning of a much larger unraveling in American retail, as three major department store chains accelerate store closures across the country.
Unprecedented Retail Contraction in 2025
The retail crisis is unfolding in real time. From January to November 2025, major retail chains are accelerating closures at a pace surpassing even the pandemic years. The broader industry is experiencing what analysts describe as the most severe retail contraction in recent history—not necessarily driven by bankruptcy, but by fundamental shifts in consumer behavior and retail economics.
Roughly 1,745 U.S. retail stores from major chains are confirmed closing in 2025: Forever 21 eliminating 350 stores after filing for bankruptcy in March 2025, Claire’s and Icing closing 291 locations following a second bankruptcy filing in August, Torrid removing 180 stores, Macy’s cutting 66 this year with 150 planned by 2026, JCPenney closing 8 locations, and Joann shuttering all 850 stores after its second bankruptcy in January 2025. Industry analysts project approximately 15,000 total store closures across all retailers in 2025—more than double the rate from previous years. This wave represents billions in erased revenue and tens of thousands of jobs lost.
Yet within this broader contraction, the stories of three anchor retailers diverge sharply. While Forever 21, Claire’s, and Joann have filed for bankruptcy or entered liquidation, Dillard’s, Macy’s, and JCPenney are managing store consolidations through very different circumstances: strategic planning, post-bankruptcy stabilization, and financial strength.
Three Different Paths: Strategic Closures vs. Bankruptcy
Macy’s: Strategic Retrenchment
Macy’s announced its “A Bold New Chapter” strategy in February 2024, committing to close approximately 150 underperforming stores through 2026 while investing heavily in 350 go-forward locations. The 66 closures planned for 2025 are part of this deliberate transformation strategy, not a distress situation. According to the company, pilot stores from this strategy have boosted sales for three consecutive quarters and contributed to record customer satisfaction scores for the Macy’s nameplate.
JCPenney: Past Bankruptcy, Present Stability
JCPenney filed for Chapter 11 bankruptcy protection in May 2020, citing pandemic impacts and broader industry struggles. However, the company emerged from bankruptcy in February 2021 under new ownership by Simon Property Group and Brookfield Asset Management, securing approximately $1.5 billion in new financing for its turnaround. Today, JCPenney is closing only 8 locations in 2025 as part of normal portfolio management—far fewer than competitors—suggesting the company has stabilized post-bankruptcy.
Dillard’s: Selective Optimization Despite Strong Performance
Dillard’s has never entered bankruptcy and remains financially stable and profitable. The company reported net income of $163.8 million in the first quarter of 2025 alone, with $1.2 billion in cash and short-term investments remaining after a $98 million stock repurchase. In Q3 2025, Dillard’s reported store sales rose 3% year-over-year—a marked improvement suggesting a turnaround in progress. Fitch ratings affirmed Dillard’s at ‘BBB-‘ with a positive outlook, indicating solid financial health.
Despite this strength, Dillard’s has closed select underperforming locations, including stores in Tennessee (Murfreesboro, closed January 2025), Ohio, Florida, Nebraska, Arizona, and Texas (Plano location, scheduled for early 2026). CEO William Dillard has emphasized the company’s ability to control expenses and maintain a healthy cash position, positioning closures as strategic portfolio optimization.
The Paradox: Traffic Without Sales
Retail executives face a puzzling contradiction: malls remain destinations for shoppers, yet department stores keep failing. According to data from Placer.ai, overall mall visits remained relatively strong in early 2025, with indoor malls showing 1.8% year-over-year visit growth in the first half of 2025 and average dwell time increasing 3.3%.
However, shoppers are taking more deliberate, research-driven approaches to purchases, with many arriving solely to pick up online orders or pre-planned purchases. This new mindset erodes the impulse-driven browsing that once fueled department store sales, leaving anchors with encouraging foot traffic that converts poorly into sales.
The buy-online-pick-up-in-store model has reshaped retail economics. Shoppers now expect the lowest price and maximum convenience. Browsing becomes secondary, and traditional department stores—built on discovery, exploration, and wide assortments—struggle to adapt. E-commerce and in-store pickup didn’t just compete with brick-and-mortar; they rewired it, stripping away the margin-rich spontaneity that once kept large chains profitable.
The Human Cost and Industry Fallout
The scale of disruption remains profound regardless of the underlying cause. When Dillard’s closed its 145,000-square-foot store in Murfreesboro, Tennessee, 75 employees lost jobs. Macy’s closures are displacing thousands of workers nationwide. Joann Fabrics’ liquidation eliminated approximately 19,000 jobs. The broader 2025 closures represent livelihoods lost, community anchors removed, and retail workers facing uncertain futures.
Joann Fabrics & Crafts stands as the year’s most total retail collapse. After emerging from bankruptcy in March 2024, the company re-entered Chapter 11 in January 2025. By February, it announced the liquidation of all 850 stores, dissolving an 82-year-old craft empire. Forever 21’s downfall reflects a sector exhausted by globalization and price wars, with the chain confirming the closure of 350 stores after filing bankruptcy in March 2025, ending its presence as a mall mainstay.
The Future of American Department Stores
The department store contraction is part of a wider upheaval. Across major chains, more than 1,700 stores are closing in 2025—an unprecedented wave driven by shifting consumer expectations and intense online competition. Industry projections suggest the U.S. retail landscape will contract significantly in coming years, with weaker mid-tier retailers among the most vulnerable.
Survival may depend on aligning physical stores with digital ecosystems, modernizing product assortments, and maintaining financial flexibility. Macy’s and Dillard’s are demonstrating that planned contraction combined with strategic investment can offer a path forward. Yet weaker players—retailers with overleveraged balance sheets, limited e-commerce capabilities, and shrinking market share—are being forced into bankruptcy and liquidation.
The stakes are high: what is being lost is not just commerce, but a piece of American cultural identity. Yet within this upheaval, some retailers are proving that thoughtful consolidation and modernization can provide stability even as the broader retail landscape undergoes its most dramatic transformation in decades.