California Retail Collapse: How Store Closures Are Redrawing the State’s Economy

By late 2025, rumors began circulating online that Walmart, America’s largest retailer, might be preparing to close stores across California out of fear of looting, rising crime, or collapsing demand.

Shoppers posted videos of half-empty aisles and speculated about a coming retail exodus.

Walmart publicly rejected those claims, insisting it remained committed to the state.

Yet behind the denials, a quieter and more complicated story was unfolding.

In September 2025, Walmart permanently closed its Pleasanton Supercenter in the East Bay, eliminating 87 jobs.

The company said the decision followed a “careful review” of the store’s financial performance.

Pleasanton was not an isolated case.

Over the previous eighteen months, five other Walmart locations in California had shut their doors, including stores in San Diego, El Cajon, Granite Bay, West Covina, and Fremont.

In total, more than 530 employees lost their positions across six closures.

The pattern did not suggest a wholesale retreat from California, but rather a strategic recalibration.

While shutting underperforming locations, Walmart simultaneously opened or upgraded others.

A new Supercenter opened in Eastvale in spring 2025, and a converted location launched in Mountain View that summer.

Spokesperson Anne Hatfield reiterated that Walmart had invested more than $800 million in California over five years and completed 57 store remodels.

The message was clear: the company was not abandoning the state, but reshaping its footprint.

Still, the implications were unsettling.

If the world’s most efficient mass retailer could not make certain California stores profitable, what did that say about the broader retail environment? Walmart cited financial performance, not theft or safety, as the primary reason for its closures.

For critics, that admission underscored a deeper problem: the economics of operating brick-and-mortar retail in parts of California were becoming unsustainable.

The Walmart story soon paled beside the collapse of an institution long associated with low-income communities.

In April 2024, discount chain 99 Cents Only announced it would liquidate its entire business after forty-two years of operation.

Founded in Los Angeles in 1982, the company had grown to 371 stores nationwide and served millions of working families.

Within sixty days, every location was gone.

California suffered the heaviest blow.

Two hundred sixty-five stores closed across the state, eliminating thousands of jobs and stripping many neighborhoods of their only affordable retailer within walking distance.

Nationwide, roughly 14,000 employees were laid off.

Interim chief executive Mike Simoncic blamed the collapse on lasting disruptions from the pandemic, shifting consumer habits, rising shrink, and persistent inflation.

By June 3, 2024, the familiar blue-and-yellow signs had vanished from every California storefront.

For residents of low-income districts, the consequences were immediate.

In areas without reliable transportation, the loss of 99 Cents Only meant longer trips for basic household goods or higher prices at smaller corner stores.

Community advocates warned that the closures would deepen inequality in neighborhoods already classified as retail or food deserts.

The crisis soon spread to pharmacies, transforming a retail downturn into a public health concern.

Rite Aid filed for bankruptcy twice, first in October 2023 and again in May 2025.

During the second filing, the company liquidated hundreds of stores, including 347 locations in California alone.

Walgreens announced plans to close 1,200 stores nationwide over three years, and CVS revealed it would shutter 900 locations, with hundreds more scheduled.

San Francisco became an emblem of the upheaval.

In a single week in February 2025, Walgreens closed twelve stores across the city.

Over the past decade, San Francisco lost roughly 40 percent of its pharmacies.

In Bayview–Hunters Point, already designated a food desert by federal standards, the final Walgreens closed in early 2025.

In Oakland’s District 7, residents were left with just one pharmacy serving the entire district.

Retail executives frequently pointed to theft and organized crime as driving forces behind the closures.

Target, which shut nine stores nationwide in September 2023, including four in California, cited safety concerns and projected losses of $500 million from theft.

Yet subsequent investigations complicated the narrative.

Crime data analyzed by CNBC showed that some closed Target locations had fewer reported incidents than nearby stores that remained open.

Even Walgreens later acknowledged that earlier statements may have overstated the problem.

In 2023, the company’s chief financial officer conceded that the firm had “cried too much” about theft.

Meanwhile, the National Retail Federation retracted a widely cited estimate that organized retail crime caused $45 billion in losses, admitting the figure was based on faulty inference.

Studies suggested that organized crime accounted for only a small share of retail shrink.

State data painted a nuanced picture.

California shoplifting rose significantly after the pandemic, but remained far below historic peaks from the 1980s.

Most of the increase was concentrated in a handful of counties, particularly Los Angeles.

Analysts concluded that while theft was a serious issue in specific areas, it could not alone explain the scale of closures sweeping the state.

Department stores offered further evidence of structural decline.

Macy’s announced plans to close 150 stores by 2027, including nine in California.

Among them was the Union Square flagship in San Francisco, a 700,000-square-foot landmark that had operated since 1929.

Nordstrom exited both of its downtown San Francisco locations in 2023 after thirty-five years, citing shifting consumer patterns and deteriorating conditions.

The effects rippled through commercial real estate.

In June 2023, the owners of San Francisco’s Westfield Mall surrendered the property after defaulting on a $558 million loan.

Union Square’s retail vacancy rate climbed above 22 percent by late 2024, compared with a national average near 4 percent.

Within five years, the city went from one of the tightest retail markets in the country to one of the emptiest.

Discount chain Big Lots added to the damage when it filed for bankruptcy in September 2024.

The company closed seventy-five of its 109 California stores, gutting retail corridors in Sacramento, Fresno, Bakersfield, Stockton, and other Central Valley cities.

For many towns, Big Lots and 99 Cents Only had been anchor tenants drawing foot traffic to surrounding businesses.

As large retailers disappeared, grocery access emerged as one of the most alarming consequences.

In November 2025, Bayview–Hunters Point lost its only major chain grocery store.

West Oakland had already lost its sole full-scale supermarket years earlier.

 

In parts of South Los Angeles, more than half a dozen grocery closures left residents dependent on convenience stores and fast-food outlets.

Public health data linked the changes to higher obesity rates and worsening chronic disease.

Yet the picture was not uniformly bleak.

Some retailers continued to expand.

Costco announced two new California warehouses opening in 2025, while Trader Joe’s revealed plans for five additional locations.

Target pledged to open new stores in selected markets, including South Lake Tahoe.

The survivors, analysts said, shared a common strategy: smaller formats, affluent or high-density locations, and tightly managed supply chains.

National trends offered sobering context.

The United States recorded more than 7,300 store closures in 2024, a sharp increase from the year before.

Forecasts for 2025 projected as many as 15,000 closures, the highest total in recent history.

E-commerce, inflation, high labor costs, and rising interest rates were squeezing margins nationwide.

California, with its high operating expenses and complex regulations, felt the pressure first and hardest.

Since 2022, the state lost tens of thousands of retail jobs.

Unemployment hovered above the national average, and many displaced workers struggled to find comparable positions.

Each closure triggered secondary effects: reduced tax revenue, declining foot traffic, and shrinking support for nearby small businesses.

For residents, the transformation was deeply personal.

When Walmart closed, families drove farther for groceries and school supplies.

When 99 Cents Only vanished, budget-conscious shoppers lost their cheapest option.

When pharmacies disappeared, elderly patients faced long trips for prescriptions.

The departure of anchor stores often signaled the beginning of a commercial death spiral.

Corporate decisions were rarely announced with fanfare.

Closures appeared quietly in regulatory filings or short press releases, often after the final calculations had been made.

By the time communities noticed, the exit was irreversible.

California’s retail landscape is now being redrawn block by block.

Some districts will attract new concepts and investment.

Others may become permanent deserts of empty storefronts and shuttered malls.

The companies have already chosen where to stay and where to go.

The question facing policymakers and communities alike is how to respond.

Without intervention, analysts warn, the divide between thriving retail hubs and abandoned neighborhoods will continue to widen.

What once seemed like a temporary downturn now looks increasingly like a structural transformation — one that will shape California’s economy, health, and daily life for decades to come.