Retailers Brace for Closures: A 2026 Outlook
The retail landscape continues to shift as several major companies announce strategic reductions to their physical store footprints heading into 2026. These moves, driven by a combination of economic pressures and evolving consumer habits, signal a period of significant transformation for brick-and-mortar operations.
Major Grocery and Pharmacy Chains Scaling Back
A number of prominent names in groceries and convenience are implementing closure plans:
- Kroger has confirmed a strategy to shutter approximately 60 locations over an 18-month period. The company states this consolidation will provide a modest financial benefit, allowing it to reinvest in growth, including plans to break ground on new store constructions.
- Walgreens is undertaking a substantial optimization effort, planning to close around 1,200 underperforming stores across the United States within a three-year window. The company cites challenging profit margins, influenced by low drug reimbursement rates and softer retail sales, as the primary reason.
- Big Lots is moving forward with a more focused operational model following a 2024 Chapter 11 bankruptcy filing. As part of this restructuring, the company announced plans to close over 340 store locations.
Department Stores and Specialty Retailers Refining Their Presence
The department store sector is also actively streamlining its physical portfolio to enhance overall profitability.
- Macy's is progressing with its "Bold New Chapter" strategy, which involves closing 150 underproductive stores over three years. This initiative aims to return the retailer to sustainable growth, with simultaneous investments planned for 350 of its remaining locations. Dozens of closures have already been identified across multiple states.
- JCPenney will be closing its Pleasanton, California store in February 2026, attributing the decision to an inability to secure suitable lease terms for that market.
- Saks Off 5th is set to close nine stores beginning in January 2026, with locations including Chicago, Philadelphia, and Washington, D.C. The company describes this as a plan to optimize its store network.
- Yankee Candle has confirmed plans to close 20 of its stores in the U.S. and Canada during 2026. The closures, representing a small fraction of the brand's total sales, are part of a broader productivity plan to concentrate resources on the highest-performing channels and locations.
Sporting Goods and Apparel Stores Adapting to Market Changes
Several retailers in the sporting goods and apparel space are making similar adjustments.
- Orvis announced it will close 31 stores by early 2026, with the company identifying tariffs as a contributing factor in its decision.
- REI plans to close three specific locations in 2026, including its flagship SoHo store in New York City. The cooperative stated it is adapting its physical presence in response to evolving markets and customer needs to ensure long-term success.
- Foot Locker, under the ownership of Dick's Sporting Goods, is planning to close a number of underperforming stores. Leadership indicated the goal is to address inventory challenges and position the brand for a potential rebound during the 2026 back-to-school season.
These widespread closures highlight a broader industry trend where retailers are critically evaluating the performance of each location. Factors such as rising operational costs, including those influenced by trade policies, shifting consumer spending, and the strategic reallocation of capital towards higher-performing stores and digital platforms are key drivers behind these decisions. While some businesses like Red Robin have revised closure plans downward due to improved financial results, the overall movement suggests a continued focus on leaner, more efficient physical retail networks for the future.
