The Forest Fire Economy
Rite Aid just filed for bankruptcy. Again.
It's their second Chapter 11 in under a year. Industry insiders call it "Chapter 22," and it's not a joke. 1,277 stores hang in the balance as they scramble for $1.94 billion in financing just to keep the lights on. Without a buyer, they're gone – all of them. Vicious cycles are real.
Joann Fabrics is doing the same thing – 800 stores, 82 years of history, vanishing by May. Going-out-of-business clearance sales are already draining the shelves while loyal customers wonder where they'll buy quilting supplies next month.
But here's the thing about forest fires: they clear dead wood. They make room for new growth. They're destructive and necessary at the same time.
This isn't just creative destruction. It's corrective destruction. We built too many stores selling too many things people weren't willing to pay for. The market is doing what markets do.
The Corner Office Shuffle
Susan Morris is the new CEO of Albertsons.
She started as a store employee in Denver 40 years ago. Now she runs the whole company.
This happened because the $25 billion Kroger-Albertsons merger collapsed, regulators killed it, and both companies need fresh leadership to chart new paths forward. Board chair Jim Donald says Morris brings "unmatched expertise" to the role.
Sometimes, not getting what you want is a gift. The distraction of merger drama is over. The focus can return to what actually matters: serving customers better than Amazon does.
Perhaps the best merger was never going to be between two grocers, but between human leadership and digital transformation.
Digital Resurrection
BuyBuy Baby is back from the dead.
Not as stores. As a website.
The baby goods retailer launched on May 8th with a splashy promotion. It's the latest example of investors buying bankrupt retail brands and rebuilding them for the digital age. No rent. No salespeople. Just pixels, servers, and the equity left in a once-trusted name.
They're even launching a tokenized digital security tied to the BuyBuy Baby IP. Finance innovation meeting retail desperation.
But here's the paradox: can you rebuild a baby store without letting parents touch, feel, and test the products? The magic of retail isn't just selection and price. It's tactile. It's experiential. It's human.
The question isn't whether these digital zombies can exist. It's whether they can thrive.
The Great Emptying
15,000 stores will close this year.
Only 5,800 will open.
That's the projection from Coresight Research. It's more than double last year's net decline.
Entire retail chains are disappearing: Party City gone, Joann going, Rite Aid endangered. The physical retail landscape is contracting faster than at any point since 2020.
It's not a retail apocalypse. It's musical chairs. The music stopped, and there aren't enough seats. Not everyone gets to stay in the game.
The Opportunity Trappers
Burlington is absorbing 45 former Joann stores.
While others retreat, off-price retailers advance.
This isn't coincidence. It's strategy. Burlington saw Q4 sales jump 4.8% to $3.3B, with profits up 14.6%. They opened 101 new stores last year. They're playing a different game than the retailers in bankruptcy court.
They're taking advantage of the carnage, scooping up prime locations at favorable lease terms, bringing their treasure-hunt experience to new markets hungry for value.
Smart landlords aren't mourning Joann. They're celebrating Burlington. Higher traffic. Better performance. Stronger lease covenants. The ecosystem is rebalancing itself.
The Remarkable Revival
Barnes & Noble is opening 60+ new bookstores this year.
Yes, bookstores. In 2025.
After 57 new locations last year, the chain that Amazon was supposed to kill off a decade ago is growing faster than at any point in recent memory. It's thriving when conventional wisdom says it should be dying.
The secret? They've empowered local store managers to curate their own inventory. They've embraced #BookTok culture. They've remembered that a bookstore isn't just a place to buy books – it's a sanctuary, a discovery zone, a community hub.
Like vinyl records in a streaming world, physical books offer something digital can't replicate. Some experiences can't be compressed into bits and bytes.
The Great Job Reset
64,000 retail jobs have been cut in the first four months of 2025.
That's 296% higher than the same period last year.
April alone saw 7,235 retail positions eliminated – a 77% year-over-year jump, second only to government layoffs.
The Container Store, JC Penney, Saks – they're all trimming corporate and distribution center roles. They're citing economic uncertainty, technology implementation, changing trade policies.
It's painful. It's disruptive. It's also inevitable.
The retail workforce is reshaping itself for a digital-first, automation-enhanced future. Different skills matter now. Different roles drive value. The organizations that adapt fastest will emerge strongest.
The External Pressures
New tariffs loom on the horizon.
Potential 10% duties on Chinese imports. 25% on goods from Mexico and Canada.
Meanwhile, retail theft continues grabbing headlines. Organized retail crime, traditional shoplifting, BOPIS fraud – retailers rank them among their top concerns, investing in security measures and advocacy campaigns.
But is theft really the villain it's portrayed to be? Some experts think retailers are using it to mask other operational failures or justify price increases. The data on shrink as a percentage of sales hasn't changed dramatically over time.
What if the biggest threats aren't the ones making headlines?
The AI Shopping Revolution
ChatGPT is now a shopping companion.
OpenAI rolled out features letting it recommend products, complete with images, prices, reviews, and purchase links.
Two-thirds of Millennials and Gen Z are already using AI tools instead of search engines for product recommendations. Adobe found people are buying more based on AI suggestions. ChatGPT's search function processed over 1 billion queries in a single week.
Yet 40% of shoppers remain skeptical, worried about data privacy and algorithmic bias.
It's like having a personal shopper who never sleeps, never forgets, and has instant recall of every product ever made. But do we trust it to know what we really want?
The Second Life Economy
Resale programs are launching everywhere.
Retailers from fashion to electronics are building platforms to buy back and resell used merchandise. Deloitte's Q1 report highlights this trend as a key strategy to attract eco-conscious Gen Z customers and offer value during uncertain economic times.
DTC brands that started online-only are opening physical stores or partnering with big-box retailers. The lines between channels continue blurring.
The real question: Is corporate sustainability actually sustainable, or just another way to drive sales? Are these programs moving us toward true circularity, or just creating new consumption cycles with greener marketing?
The Cautious Consumer
People are shopping differently this spring.
They're prioritizing essentials. Hunting for deals. Redirecting discretionary dollars from retail goods to experiences like travel and dining.
The result is a two-speed retail economy: value retailers thrive while mid-tier specialty stores struggle. Off-price discounters see traffic growth while department stores watch theirs decline.
It's not that consumers aren't spending. They're just spending differently. More selectively. More intentionally. The definition of "value" has evolved beyond just price to encompass quality, longevity, and meaning.
The upcoming Q1 earnings season will reveal who's adapting to this shift and who's fighting yesterday's battle.
Five Big Ideas for Retail Real Estate Now
For GrowthFactor.ai clients navigating site selection and lease management in this upheaval, here's what matters:
1. The Great Space Grab is happening.
With 15,000 closures creating vacancies, expansion-minded retailers face a once-in-a-generation opportunity to secure prime locations at favorable terms. The window won't stay open forever.
2. Guessing is expensive. Data is cheap.
In volatile markets, AI tools to perform Site Evaluation aren't just nice to have – they're essential. When each location decision carries higher stakes, predictive analytics separate winners from losers. Our AI agent Waldo does this on autopilot.
3. Flexibility is the new long-term.
The retailers thriving in 2025 build escape hatches into their leases. Our lease management AI agent 'Clara' identifies opportunities for terms that protect against future market shifts.
4. Cannibalization isn't just possible – it's probable.
As value retailers rush to backfill vacant spaces, understanding potential impacts on existing stores becomes critical. Our KNN machine learning models simulate these effects before they happen.
5. Stores aren't just stores anymore.
They're showrooms, fulfillment centers, return hubs, and brand experiences. Site selection must account for these evolving functions, evaluating locations not just on sales potential but on omnichannel strategic value.
The winners in retail real estate won't be the biggest or the richest. They'll be the most adaptable, the most data-driven, the most willing to challenge conventional thinking.
At GrowthFactor.ai, we're building tools for exactly these winners.
