What Stores Are Closing Because Of Bankruptcies?

Over the past few years, the retail industry has faced unprecedented challenges, with many well-known chains filing for bankruptcy. Rising operational costs, competition from e-commerce platforms, and shifting consumer habits have left once-thriving retailers struggling to survive.

The COVID-19 pandemic further accelerated these closures, leaving communities without familiar shopping destinations.When a retailer files bankruptcy, it doesn’t always mean the brand disappears completely, but it often results in widespread shutdowns.

Shoppers frequently ask which companies are shutting down so they can adjust their purchasing habits. Understanding these closures helps customers plan smarter while also reflecting on how quickly the retail landscape is changing.

In this article, we highlight 10 major retailers that have closed locations due to bankruptcy, analyzing their struggles, their impact on shoppers, and the lessons learned.

What Stores Are Closing Because Of Bankruptcies?

1. Bed Bath & Beyond – Major Retail Bankruptcy

Bed Bath & Beyond was once a household favorite for home goods, bedding, and kitchen essentials. Over the years, however, the brand lost its competitive edge due to poor leadership decisions and the rise of online giants like Amazon. Mounting debt and declining sales eventually pushed the company into bankruptcy in 2023.

The filing led to hundreds of store closures across the U.S., shocking loyal shoppers who relied on the brand for registries and affordable household products. While Overstock.com purchased some of its assets, the physical stores have mostly disappeared. This left many communities without a one-stop destination for home décor and essentials.

The decline of Bed Bath & Beyond shows how even trusted names can collapse without adapting to digital shopping demands. For many consumers, its absence represents the end of a familiar shopping experience.

Pros:

• Wide selection

• Trusted brand

• Affordable deals

• Popular registry

• Convenient locations

• Strong reputation

• Customer loyalty

Cons:

• Poor management

• Online competition

• Declining sales

2. Sears – Iconic Department Store Bankruptcy

Sears, once considered the backbone of American department stores, suffered years of decline before officially filing bankruptcy in 2018. Its inability to modernize operations, coupled with growing online competition, led to one of the largest retail collapses in U.S. history. At its peak, Sears had thousands of locations nationwide.

The closures left malls across America with massive empty spaces, drastically altering the retail environment. Even with restructuring attempts, Sears could not maintain its relevance as customers flocked to more innovative retailers.

Only a handful of locations remain, serving as a reminder of the company’s former glory. For many, Sears’ fall is an example of how even the most established chains are not immune to changing shopping behaviors.

Pros:

• Wide variety

• Appliance leader

• Nationwide presence

• Affordable options

• Customer loyalty

• Established brand

• Credit card perks

Cons:

• Outdated model

• Weak e-commerce

• Declining relevance

3. Toys “R” Us – The Collapse Of A Childhood Giant

Toys “R” Us was a beloved retailer for decades, known for its massive toy aisles and family-friendly atmosphere. However, overwhelming debt and competition from online retailers caused the company to declare bankruptcy in 2017. The closure of its U.S. stores marked the end of an era for children and parents alike.

The shutdown was particularly heartbreaking because the store had become a cultural icon, synonymous with childhood joy. While efforts have been made to revive the brand in smaller formats, it has never regained its original presence.

Its bankruptcy highlighted the growing dominance of online shopping in industries once thought untouchable. Many families still feel nostalgic for the experience of walking through Toys “R” Us’ toy-filled aisles.

Pros:

• Wide selection

• Family-friendly

• Beloved mascot

• Nostalgic appeal

• Great variety

• National presence

• Strong reputation

Cons:

• Heavy debt

• Online pressure

• Poor strategy

4. JCPenney – Mall Staple Shut Down

JCPenney, once a reliable stop for affordable fashion and home goods, struggled with years of falling sales and stiff competition. The company filed for bankruptcy in 2020 after failing to modernize its stores and adapt to online shopping. This resulted in hundreds of locations being permanently closed.

Though new ownership has kept some stores alive, its footprint has shrunk considerably. The pandemic accelerated its struggles by cutting mall traffic, making recovery even more difficult.

JCPenney’s decline reflects the larger collapse of mid-tier department stores struggling to find relevance in today’s market. For many longtime customers, its disappearance represents a loss of tradition.

Pros:

• Affordable prices

• Wide product range

• Mall presence

• Long history

• Customer loyalty

• Frequent sales

• Brand recognition

Cons:

• Poor strategy

• High debt

• Online weakness

5. Forever 21 – Fast Fashion Bankruptcy

Forever 21 became a global success by offering trendy, inexpensive clothing for young shoppers. However, rapid expansion and poor adaptation to e-commerce led the company to file bankruptcy in 2019. Hundreds of stores worldwide were forced to close.

The fast-fashion retailer faced stiff competition from digital-first brands like Shein and Fashion Nova. Consumers also became more conscious of sustainability, which further hurt its reputation.

Although Forever 21 still operates, its presence is smaller and more focused. Its collapse demonstrates the dangers of overexpansion in an already crowded fashion market.

Pros:

• Trendy styles

• Affordable prices

• Youth appeal

• Wide presence

• Seasonal variety

• Fashion-forward

• Easy access

Cons:

• Overexpansion

• Online rivals

• Sustainability issues

6. Pier 1 Imports – Home Décor Bankruptcy

Pier 1 Imports was known for unique furniture and décor with an international flair. Unfortunately, the company couldn’t compete with e-commerce rivals like Wayfair, and in 2020, it filed bankruptcy and shuttered all physical locations.

The closures left communities without access to Pier 1’s stylish in-store experience. Its heavy reliance on foot traffic and lack of digital investment proved to be a fatal flaw.

Today, Pier 1 operates as an online-only brand. While its name survives digitally, the loss of its stores marked a major shift for décor enthusiasts.

Pros:

• Unique items

• Stylish décor

• Wide selection

• Strong branding

• Affordable deals

• Seasonal variety

• Customer appeal

Cons:

• Weak online presence

• High competition

• Store closures

7. RadioShack – Electronics Retail Bankruptcy

RadioShack, once a favorite for tech enthusiasts, fell victim to changing technology trends. It filed bankruptcy twice, in 2015 and 2017, after years of shrinking relevance. Thousands of stores were closed, leaving behind a fraction of its original network.

Shoppers turned to Amazon and other retailers for electronics, leaving RadioShack unable to sustain its business model. Even revival efforts couldn’t bring back its former popularity.

Today, it exists mainly online with limited presence. RadioShack’s fall shows how quickly tech-driven industries can leave behind outdated retailers.

Pros:

• Tech expertise

• Wide selection

• DIY appeal

• Affordable parts

• Popular brand

• Long history

• Customer trust

Cons:

• Outdated model

• Weak innovation

• Digital shift

8. Payless ShoeSource – Discount Shoe Bankruptcy

Payless ShoeSource was once the go-to destination for affordable footwear. But rising competition and a lack of digital adaptation caused it to file bankruptcy in both 2017 and 2019. This led to the closure of all U.S. stores.

The brand had built a loyal following among budget-conscious families, especially for children’s shoes. However, online platforms offered greater variety at similar prices, forcing Payless out of the market.

Though it has attempted relaunches, Payless has never regained its former influence. Its disappearance highlights the vulnerability of discount retailers in the digital age.

Pros:

• Affordable shoes

• Family focus

• National reach

• Wide selection

• Popular brand

• Accessible stores

• Loyal customers

Cons:

• Weak online model

• Competition pressure

• Poor strategy

9. Lord & Taylor – Historic Retail Bankruptcy

Lord & Taylor, America’s oldest department store, filed for bankruptcy in 2020 after nearly 200 years in business. The decline of malls and rising competition from online retailers played major roles in its downfall.

The closure marked the end of an institution known for its elegance and fashion. Even with attempts to reposition the brand, the company couldn’t adapt to modern consumer demands.

Today, Lord & Taylor survives only as an e-commerce platform. The shutdown of its physical stores remains a symbolic loss for retail history.

Pros:

• Historic brand

• Fashion focus

• Prestigious image

• National reach

• Customer loyalty

• Unique collections

• Brand recognition

Cons:

• Mall decline

• Weak adaptation

• High costs

10. Neiman Marcus – Luxury Retail Bankruptcy

Neiman Marcus, a luxury department store, filed bankruptcy in 2020 during the pandemic. Reduced consumer spending on high-end goods, combined with heavy debt, led to widespread store closures.

While some locations remain open, the company has scaled back to focus on online sales and flagship stores. This restructuring allowed it to survive, but on a smaller scale.

Its bankruptcy illustrates that even luxury retailers are not safe from economic downturns. For shoppers, fewer physical options now exist for high-end fashion.

Pros:

• Luxury focus

• Prestigious brand

• Fashion leader

• Strong reputation

• Customer loyalty

• Unique products

• Exclusive experience

Cons:

• High debt

• Reduced presence

• Pandemic impact

About Retail Bankruptcies FAQs

1. Why are so many retailers going bankrupt?
High debt, online competition, and shifts in consumer spending habits are the main causes.

2. Does bankruptcy always mean a store closes?
Not necessarily—some continue online or under new ownership, but many physical stores shut down.

3. Which bankruptcies hurt malls the most?
Sears, JCPenney, and Lord & Taylor closures had the biggest impact as anchor tenants.

4. Are online retailers responsible for these closures?
Yes, online shopping has diverted customer spending away from physical stores.

5. Can bankrupt brands recover?
Some, like Forever 21 and Toys “R” Us, have tried relaunches, but usually at smaller scales.

6. How do closures affect communities?
They lead to job losses, fewer shopping options, and declining mall traffic.

7. Which industries are most at risk now?
Department stores, fashion chains, and specialty retailers remain most vulnerable.

Conclusion

The wave of retail bankruptcies has reshaped shopping in the U.S., affecting both consumers and communities. Chains like Sears, Bed Bath & Beyond, and Toys “R” Us serve as reminders that even iconic retailers can collapse if they fail to adapt. The rise of e-commerce has permanently shifted shopping habits, leaving many brick-and-mortar stores struggling.

While some companies have survived by moving online, others have vanished completely from the marketplace. This has left fewer options for consumers and a transformed retail landscape.

To stay ahead, shoppers should explore alternative retailers, both local and digital, and stay updated on industry changes. Supporting innovative brands can help prevent future collapses.

Now is the time to adapt—shop smart, support evolving retailers, and embrace the future of shopping before more favorites disappear.