A new year always brings new trends with it — headwinds and tailwinds that will end up defining retail for that period of time. While it’s impossible to predict all of them (a pandemic that upended physical retail wasn’t on our list in 2020), we can point to prevailing patterns that have emerged and are likely to continue in the year ahead.

Some topics, like retail’s handling of shrink and theft, have come into sharper focus over the past year or two, while others have been rattling around the industry in some fashion for years. The evolution of department stores has taken several twists and turns over time, as those retailers move more stores to off-mall locations, downsize their store fleets, experiment with smaller formats and change ownership. Distressed retail, too, is always shifting to tell us new things about the state of the industry and its individual sectors.

Undoubtedly, there will be themes that rise to the surface throughout the year ahead, but until then, here is a selection of major retail trends to watch in 2025.

1. An uncertain outlook for distressed retail

The trajectory of currently distressed home, apparel, and discretionary retail may be uncertain in the new year as the U.S. readies for a new presidential administration — and a likely full slate of new economic policy initiatives.

Looking ahead, mid-sized retailers that mostly offer basic, lower end brands of discretionary merchandise targeted at middle-income consumers are likely to slide further into distress, business consulting and management advisory firm FTI Consulting said in a blog post. These retailers don’t offer an exciting value proposition and could disappear from the landscape without being missed, the firm said.

Retail Dive covered nearly 20 retailers that filed for bankruptcy in 2024. They include apparel seller Express, which was bought by a newly formed joint venture between WHP Global and mall owners Simon, Brookfield and Centennial. Conn’s Inc., and its Conn’s Home Plus and Badcock Home Furniture & More banners, went out of business and closed all of their stores. 

Big Lots also filed for Chapter 11 and began store closing sales after a deal to sell itself to a private equity firm fell through. The company went on to close a sales agreement with Gordon Brothers Retail Partners that allows Variety Wholesalers to acquire between 200 and 400 locations under the Big Lots brand.

Direct-to-consumer brands also experienced waves of upheaval last year that may continue. After rising and riding high before the pandemic, five years later, many DTC companies began hitting growth ceilings as they continue grappling with rising online order fulfillment costs.

Simeon Siegel, managing director at BMO Capital Markets, told Retail Dive in November that the trend of companies building their identity around their selling channel versus what they’re selling appears to be over. Instead of aspiring to be a DTC brand, companies instead should focus on selling something special and identify the best strategies to reach consumers in a brand-appropriate way, Siegel said.