Why 2024 Was a Brutal Year for Mid-Tier and Discount Retailers

• More than 7300 stores in the US have recorded closure in 2024, which is a 57 percent increase from the previous year-closing in 2023 as a lot was accounted for inflation, strategic missteps, and competition from the online stores.
• That is what they said; major closures involved mid-tier and discount retailers such as Family Dollar and Big Lots, with megastores like Amazon and Walmart flourishing.
• The opening of nearly 6,000 new outlets was led by worldwide discount chains like Aldi and TJ Maxx but also includes the returning of some brands such as Barnes and Noble.

Retail Apocalypse again reappeared in 2024, with a heartbreaking pace of collapse of major businesses across the US. According to Coresight Research, over 7300 retailers went into bankruptcy last year, a staggering 57% more than the numbers in 2023. That would make the records because 2020 was the year the outbreak brought havoc onto businesses nationwide.

The like of traditional brands and daily essentials have seen high street names amongst closures. Family Dollar has closed up its doors to 718 stores. CVS and Walgreens did away with services in over 1,000 locations. Big Lots is closing down around 600 stores, while the likes of LL Flooring went bankrupt entirely. Party City suffers insolvency, and The Container Store has gone for a bankruptcy filing, keeping in suspense the future of its 100 outlets.

The restaurant industry was not immune by the fallout. Red Lobster and TGI Fridays filed bankruptcy, while Denny’s and Applebee’s announced major closures.

What went awry?

These closures didn’t happen for one reason alone, rather a whole range of issues hampered businesses in combination. Inflation, the highest in 40 years, weighted firms and consumers alike. Most retail outlets got buffeted by intense competition with big corporations that were

Some switched off the price and budget, and some could not manage to adopt internet shopping early enough and over-expanded.

Consumers are growing increasingly price-sensitive and intolerable with poorly run stores. Stock outages, bad customer service, and awkward shopping experiences push people toward online avenues that are much more convenient.

Retail has just registered a very short spell of boom in 2021-2022, the complete story behind it. People indulged in luxuries on various commodities such as furniture and electronics during the pandemic’s initial years because of government stimulus and the ability to indulge because of lockdowns. However, increasing borrowing rates and cost increases made spending toe the line, leaving retailers to react.

The Big Players Tightening the Noose

The situation of retail giants that explode growth such as Amazon, Walmart, Costco, Home Depot, and some emerging like Temu has worsened. Such giants have taken advantage of their bulk to haggle for better deals and investments in technology and store upgrades while micromids like Family Dollar and Big Lots are still trying to survive at all.

This trend affects the business of retail as the online shopping increased dramatically over the years. It is estimated by 2024 that online shopping would account for 16% of total retail sales compared with 8% in 2014. The transformation has taken place within a slow and steady drag on razed conventional retail.

The Middle Market Suffers

The mid-tier retailers were the most affected with most already weak before the contagion. Government stimulus seemed to be a good short-term help, but getting high interest rates and unrelenting inflation worsened their situation. An example here is the case of The Container Store-an upsurge in the business during the epidemic, like people renovating their houses, suffered because the housing market slowed down reducing its main customer base.

At 7-8%, mortgage rates have slowed potential buyers and sellers. All of these factors, together with changing customer preferences and stiff competition from cellar-price retailers, proved too much for The Container Store, which announced its filing just before Christmas.

The pressures of the economy have not spared discount retailers either. Family Dollar, for instance, had its own cross-hairs on it, as the mass of its low-income customers patronized Walmart, which is dominant in selling groceries. The inevitable happened – including closing its doors after facing losses – when Big Lots and 99 Cents Only also met the same fate.

Some drugstores, such as CVS, Walgreens, and Rite Aid, have received impacts from overexpansion and online and super-size competition. Amazon and Walmart offer declines in front-end sales and were drained by lower reimbursements for medications.

It’s Not the End of Retail

The outlook seems dismal, but it is not entirely bleak. Around 6,000 stores opened last year, representing a 6.5 percent increase from 2023. Many were opened in the hope of attracting bargain-hunting customers.

Aldi, the cheap German supermarket, is invading the much publicised marketplace physically, making it by opening more than 126 new stores. Discount clothing stores like TJ Maxx, Burlington, and Ross have ‘got up a storm selling to the customer and grown, hence the reduction,’ with the main beneficiaries being conventional department stores.

There are a number of interesting surprise comebacks by players. Barnes & Nobles has opened as many as 60 stores to cash in on the renewed public interest in physical booksellers. J.Crew, once bankrupt, made use of Millennial nostalgia and Gen Z curiosity to build 34 outposts and resurrect its legendary catalogue.

Looking Ahead

The future of retail is not going to be easy. Tariffs on imports from Mexico, Canada, and China are likely to disrupt the current supply chains and increase costs. But, wise retailers will find their outlets. Others whilst seizing things as low-cost goods will profit from the confusion, seeing the opportunities therein.

Return of the retail apocalypse, brick and mortar stores are very much alive. Rather, it’s a big wake-up call to brands to rethink their approaches, to change, and re-imagine how shopping can become relevant again.