This Week in Retail #124
Forty thousand stores could close in five years. Some brands are panicking. Others are building
Hey Friends,
It's been a busy week in retail. From high-profile leadership moves to existential warnings about the future of the physical store, the industry is clearly in a moment of transition. Some companies are cutting and consolidating. Others are building and experimenting. And just about everyone is trying to figure out what role AI is going to play in their future. Here's everything that happened.
Here’s what we are talking about today: Nike is cutting another 1,400 jobs as its turnaround effort pushes deeper into the tech organization -- and the executive it shed last year just landed the top job at Lululemon. We're looking at a new UBS forecast that says more than 40,000 stores could close over the next five years, and at Bed Bath & Beyond doing a very public reversal on California. On the digital side, online grocery sales are on track to approach half a trillion dollars by 2028, Sam's Club is delivering orders in under an hour, Ulta Beauty is letting you shop directly through Google's AI, and Aerie is going the opposite direction by banning AI from its creator program entirely. And Nestlé is selling Blue Bottle Coffee to the company behind Luckin Coffee.
Let's get into it……
Nike Keeps Cutting -- and Lululemon Gets the Benefit
The story connecting several of this week’s headlines is the ongoing shake-up at Nike. As part of its “Win Now” turnaround strategy, Nike announced it’s cutting about 1,400 jobs across its global operations, with the majority of those roles sitting in the tech department. Chief Operating Officer Venkatesh Alagirisamy framed the move as a push toward simplicity: the company is consolidating its technology footprint down to two hubs -- the Philip H. Knight Campus and the Nike India Technology Center -- and plans to rely more heavily on automation to move faster. The restructure also includes changes to its Air Manufacturing Innovation facilities and the integration of its Materials Supply Chain team into its broader Footwear and Apparel Supply Chain organization.
This is hardly the first time Nike has gone through something like this. CEO Elliott Hill has been in the seat since October 2024, and there have been rounds of layoffs, leadership shuffles, and restructurings essentially ever since. But the pace and scale of the current effort signals that Nike is serious about becoming a leaner operation, even if it means short-term pain for a lot of employees.
What makes this week’s cuts particularly interesting is the talent they’re sending into the market. Lululemon made waves by naming Heidi O’Neill -- a 28-year Nike veteran -- as its next CEO, effective September 8. O’Neill left Nike last May when Hill reorganized the brand around key sports and split apart her role as president of consumer, product and brand. At Nike, she had been instrumental in growing the company from $9 billion to roughly $45 billion in revenue, overseeing the product pipeline, brand voice, and consumer relationships at a truly global scale. She also brings board experience from companies like Spotify and Hyatt, and earlier career experience at Dockers.
Lululemon is handing her a genuinely difficult assignment. The athleisure brand that popularized the category has been struggling to recapture its former momentum in the U.S. market. The prior CEO Calvin McDonald -- who stepped down in January -- had acknowledged that the product had become too predictable, a critique echoed loudly by founder Chip Wilson and outside investors. Wells Fargo analysts noted late last year that Lululemon had been unable to post positive comps in its U.S. market for over 12 months, with increasing competition from brands like Alo Yoga and Vuori making it harder to stand out.
O’Neill arrives with broad credibility in the activewear space, and analysts at GlobalData called her an obvious choice. The cautionary note is that her background is more traditional than some activist investors would like -- Elliott Investment Management, which took a $1 billion-plus stake in Lululemon in December, had been pushing for Ralph Lauren veteran Jane Nielsen to get the job. Still, O’Neill has said she plans to accelerate product breakthroughs, deepen the brand’s cultural relevance, and pursue international growth -- which sounds very much like someone who has a plan, not just a résumé.
The Big Picture: 40,000 Stores Could Close in Five Years
If you wanted a backdrop for all this corporate turmoil, UBS delivered it this week with a stark macro forecast. In a research note, analysts led by Michael Lasser projected that retailers could close more than 40,000 stores over the next five years, driven primarily by the relentless growth of e-commerce and, increasingly, AI-assisted shopping. Department stores and specialty retailers are most at risk, while off-price chains are expected to keep expanding. From Q3 2024 to Q3 2025, there were already 5,000 fewer stores in the U.S. -- a meaningful shift from recent years when new openings were outpacing closures.
The number of stores per capita has already been declining for years. As of Q3 2025, there were fewer than three stores for every 1,000 people in the U.S., down about 12% from 2003. Online sales now account for more than 20% of total U.S. retail sales, up from just over 10% in 2019, and UBS expects that figure to reach 27% by 2030. The analysts’ view is that this “combination of e-commerce and AI-enabled shopping has been steadily siphoning sales away from physical stores, reducing the revenue needed to sustain large store fleets.”
Current U.S. policy is amplifying the pressure. Tariffs alone could drive significantly more closures if they remain in place through 2030. UBS estimates that retailers will collectively absorb around $100 billion in higher costs, which will likely push some of those expenses onto consumers -- a particularly painful dynamic given that a third of U.S. households earn less than $50,000 a year. The result could be an annual retail sales decline of roughly 0.5%, with the smallest and most marginal retailers bearing the brunt of it. Large chains like Walmart, Costco, and Target are expected to come out ahead.
That said, the situation isn’t hopeless for physical retail. Research consistently shows that consumers still prefer stores when they want to touch products, enjoy the shopping experience, or discover something new. The retailers most likely to survive and thrive are those that give shoppers a real reason to make the trip.
Bed Bath & Beyond Does a California U-Turn
Here’s a story that’s equal parts business news and personal drama. Marcus Lemonis, CEO of Bed Bath & Beyond Inc., had been pretty unambiguous about his feelings toward California. In an August press release, he stated flatly that “we will not open or operate retail stores in California,” calling the state overregulated and a risky environment for business. He continued to criticize Governor Gavin Newsom on social media right up through earlier this month.
So it raised more than a few eyebrows this week when the company announced that its new combined Container Store and Bed Bath & Beyond store format will include 12 locations in California, as part of a chainwide reset across 98 total locations in 34 states. The reset is called the “Store Changing” event and involves liquidating about 30% of select categories at The Container Store to make room for Bed Bath & Beyond merchandise. Early-bird shoppers can get an additional 5% discount on weekends by showing up when stores open an hour early.
The broader strategy here is Bed Bath & Beyond’s ambition to become a home services ecosystem. The Container Store acquisition, completed for about $150 million in stock and convertible notes, brings The Container Store’s organizing solutions and in-home services together with Bed Bath & Beyond’s expanded home assortment. The brand portfolio also includes Overstock.com, BuyBuy Baby, and Kirkland’s for retail, with Elfa and Closet Works focused on home services. And about a week after that deal was announced, Bed Bath & Beyond signed a letter of intent to also acquire Cabinets To Go and Lumber Liquidators parent F9 Brands Inc. Whatever you think of Lemonis’ public statements about California, the company clearly isn’t letting them get in the way of a store footprint that makes geographic sense.
Online Grocery Is the Real Growth Engine
If you want to understand where retail dollars are actually going, a new report from FMI -- The Food Industry Association and NielsenIQ lays it out clearly. Online grocery sales are projected to reach $452 billion by 2028, growing at an annual rate of about 11.6%. In 2025, online grocery sales jumped nearly 19%, and they accounted for roughly 72% of total grocery dollar growth for the year. To put that another way: without e-commerce, most grocery categories would be posting flat or declining numbers.
The report also makes clear that the divide between online and in-store is becoming less meaningful. Nearly 94% of grocery shoppers in 2025 bought both online and in-store, blending digital discovery, in-store browsing and delivery in ways that suit their schedules. The challenge for grocers is that the growth isn’t evenly distributed: Amazon and mass merchandisers together account for around 61% of online grocery sales, and their share has been growing while conventional grocers’ share has declined.
Sam’s Club is squarely in the fight for those dollars. The Walmart subsidiary launched a new one-hour Express delivery tier this week, expanding beyond its existing three-hour service. After an initial test in select markets, the option rolled out across more than 600 club locations on April 2, and the company has already fulfilled nearly 65,000 Express deliveries. The average order has been completed in 55 minutes, and the 10 fastest deliveries were all done in under 12 minutes. Pricing is $10 for Plus members and $22 for regular Club members, with no minimum purchase and in-store pricing on products.
What stands out is what people are actually ordering: bottled water, produce, rotisserie chicken, paper goods. Not special occasion items or forgotten ingredients -- everyday essentials. That suggests this isn’t a gimmick or an edge case. Shoppers are genuinely starting to treat one-hour delivery as a normal part of how they stock their homes. Analysts at GlobalData noted that the real competitive risk is not just Amazon, but the compounding effect of customers defecting for one type of mission and then gradually shifting more of their spending elsewhere.
AI Is Reshaping How People Shop
Two stories this week illustrated just how fast AI is becoming embedded in the actual mechanics of retail, and they came from very different directions.
Ulta Beauty and Google announced a partnership that goes well beyond a simple product feed integration. Over the next month, Ulta is enabling agentic commerce in Google’s AI Mode in search and the Gemini app, meaning shoppers will be able to get product recommendations, compare items and complete purchases without ever leaving Google’s conversational interface. The experience is powered by Google’s Universal Commerce Protocol, an open standard for agentic commerce developed with Shopify. Separately, Ulta is also launching Ulta AI on its own website and app -- a shopping assistant built on Gemini Enterprise for Customer Experience, drawing on data from the brand’s 46 million loyalty members to offer personalized guidance as shoppers browse.
What makes this noteworthy is the architecture. Ulta isn’t just placing products in a chat window. It’s connecting its product catalog, loyalty data, and checkout infrastructure to a system designed to meet a shopper at the exact moment they express intent -- whether that’s inside Google Search or inside the Ulta app. Other major retailers including Walmart, Target, and Etsy have made similar moves this year, but Ulta’s implementation is notable for how comprehensively it spans both third-party AI platforms and its own digital properties.
At the other end of the spectrum, Aerie launched something that’s explicitly a pushback against artificial intelligence. The American Eagle brand introduced its Realmakers Community this week, a new creator program that offers participants affiliate commissions, product seeding, campaign opportunities and access to brand-led events. The program is open to anyone with at least 1,500 followers on Instagram, TikTok, YouTube, or Pinterest. The twist is that participants are required to commit to not retouching their photos and not using AI to generate bodies or people in their content. This extends the “#AerieReal” pledge the brand made back in 2014 and its more recent campaign with Pamela Anderson emphasizing 100% unaltered imagery.
It’s a smart positioning play. As AI-generated content floods social platforms, there’s a meaningful audience that actively wants to see something that looks and feels human. And Aerie has the receipts to back up the strategy: the brand posted a 9% year-over-year increase in comparable sales in 2025, including a 23% comp increase in Q4. The authenticity angle isn’t just values-driven marketing -- it’s been a genuine business driver.
Finally, in the food and beverage world, Nestlé confirmed this week that it’s selling Blue Bottle Coffee to Centurium Capital, a Beijing-based private equity firm that is also the majority shareholder of Luckin Coffee -- China’s largest coffee chain, which operates more than 31,000 locations worldwide. The deal covers Blue Bottle’s cafes and its consumer goods business, though Nestlé will retain the rights to Blue Bottle’s single-serve Nespresso pods. Financial terms weren’t officially disclosed, but previous reports pegged the sale at around $400 million -- a significant markdown from the roughly $700 million valuation when Nestlé originally acquired a majority stake in Blue Bottle back in 2017.
Nestlé has been moving quickly to prune its portfolio under new CEO Philipp Navratil, who is focused on streamlining the company around core brands. Blue Bottle, with its 78 U.S. locations and a presence in a handful of other markets, is a relatively asset-heavy specialty retail business -- not a natural fit for where Nestlé is trying to go. For Centurium, the acquisition is a meaningful step into the North American market, coming less than a year after Luckin Coffee quietly opened its first U.S. locations. Blue Bottle is expected to turn profitable in 2026, which gives Centurium something to work with as it figures out what its American ambitions look like.
Taken together, this week’s news tells a story about an industry under pressure from multiple directions at once -- technological change, policy uncertainty, shifting consumer habits, and the ongoing challenge of figuring out which brands and formats actually deserve to survive. The companies threading that needle best seem to be the ones that know exactly what they stand for.
That’s all for today folks.