The Shift in Retail Consumer Behavior Post-Thanksgiving 2025 Store Closures

The retail landscape in 2025 has been reshaped by a confluence of macroeconomic pressures, shifting consumer priorities, and the accelerating collapse of traditional brick-and-mortar models. The Thanksgiving 2025 retail season, marked by widespread store closures and a fragmented consumer spending environment, has exposed deep structural vulnerabilities in the sector. For investors, understanding the interplay between retail stock volatility and consumer reallocation of spending is critical to navigating this complex terrain.

A K-Shaped Recovery: Divergent Consumer Behavior

The 2025 holiday season has crystallized a "K-shaped" divide in consumer behavior, where affluent households continue to spend aggressively on discretionary items, while lower-income and Gen Z consumers tighten budgets amid inflation, job market uncertainty, and . According to the National Retail Federation, , . However, this optimism contrasts with data from Deloitte and PwC, which highlight a 5% pullback in spending, particularly among budget-conscious households.

This duality is evident in spending patterns: while e-commerce sales are expected to grow by 7% to 9%, , in-store traffic for discretionary categories like home improvement and electronics has weakened. Retailers are responding with early holiday promotions and value-driven offerings, but these strategies mask underlying fragility. For instance, Walmart's fiscal 2026 guidance-falling below analyst expectations-signals a broader slowdown in consumer spending, driven by inflationary fatigue and trade policy headwinds.

Retail Stock Volatility: The Cost of Structural Shifts

The record 15,000 retail store closures in 2025-more than double the previous year's total-have created significant volatility in retail stocks. Companies like Macy's, Walgreens, and Forever 21 have faced declining foot traffic and margin pressures, with their stock performance reflecting investor skepticism. For example, Macy's beta coefficient , indicating heightened sensitivity to market movements compared to its historical average of 1.2. Similarly, , as investors factored in reduced private equity support and the strain of tariff-related costs.

The volatility is further amplified by macroeconomic uncertainties. Trade policy shifts, including potential decisions on tariffs, could disrupt cost structures and consumer spending behavior. Retailers unable to pass on rising costs-particularly those in discretionary sectors-are likely to see continued underperformance.

Sector Reallocation: From Discretionary to Essentials

Consumer spending reallocation in 2025 has been stark. Essentials such as groceries, household goods, and have seen resilient demand, while discretionary categories like apparel and electronics face headwinds. The gift packaging market, for instance, in 2025, driven by e-commerce's need for secure, . This shift underscores a broader trend: consumers are prioritizing practicality and affordability over luxury.

E-commerce's share of retail sales has also evolved. While in-store shopping still dominates (accounting for $5.93 trillion in H1 2025), of monthly retail spending in the first half of the year. Notably, , while essentials like groceries remained largely in-store according to research. This bifurcation highlights the importance of omnichannel strategies for retailers seeking to retain market share.

Implications for Investors

For investors, the 2025 retail landscape demands a nuanced approach. High-quality assets in essential goods and e-commerce-enabling sectors-such as sustainable packaging and -offer relative stability. Conversely, discretionary retailers and those with high fixed costs (e.g., mall-based stores) face elevated risks. and a focus on companies with strong balance sheets will be key to mitigating volatility.

The coming months will test the resilience of the retail sector. While the NRF's $1 trillion holiday spending forecast provides a silver lining, the underlying K-shaped divide and structural shifts toward e-commerce and essentials suggest a prolonged period of adjustment. Investors must remain vigilant, balancing optimism about consumer resilience with caution about macroeconomic headwinds.