Store shutdowns underscore mounting pressures on brick-and-mortar fashion, even as the retailer bets on selective expansion.

By late December, the off-price fashion sector is once again confronting a familiar paradox: contraction and expansion unfolding at the same time.

Marshalls, the U.S.-based off-price retailer known for discounted apparel and home goods, has confirmed that two of its California stores will permanently close in early January as part of a broader reassessment of its physical retail footprint. The decision comes amid rising operating costs and waning in-store traffic across much of the fashion retail landscape, particularly in high-cost urban and suburban markets.

The closures affect locations that have long been considered popular among value-driven shoppers. Company representatives emphasized that the move is not a signal of retreat from brick-and-mortar retail altogether, but rather an adjustment to shifting consumer habits and economic realities.

A recalibration, not a retreat

Like many apparel retailers, Marshalls has been navigating a retail environment shaped by inflationary pressures, higher labor expenses, and increased rents. California, while a lucrative market, has proven especially challenging due to elevated real estate and compliance costs.

Foot traffic has also failed to rebound uniformly following the pandemic-era disruptions that reshaped shopping behavior. While consumers continue to seek bargains, they are doing so with fewer discretionary trips to physical stores, increasingly blending online browsing with selective in-person visits.

Industry analysts note that off-price retailers have fared better than many full-price fashion chains, largely because of their value proposition during periods of economic uncertainty. Yet resilience does not equate to immunity.

“Even strong off-price concepts are now scrutinizing each location’s profitability more aggressively,” said a retail consultant familiar with West Coast markets. “The bar for keeping a store open is higher than it was just a few years ago.”

Expansion continues elsewhere

Paradoxically, the store closures coincide with plans by Marshalls’ parent company to open more than a dozen new locations later in the year ahead. These openings are expected to focus on regions with lower operating costs, strong population growth, and favorable leasing conditions.

This strategy reflects a broader trend among national retailers: shrinking in some legacy or high-cost markets while expanding selectively in emerging or underpenetrated ones. Rather than signaling decline, the approach is designed to optimize performance per square foot.

Executives have reiterated that the company remains committed to physical retail as a cornerstone of its off-price model, where treasure-hunt experiences and rapid inventory turnover are difficult to replicate fully online.

Workers and communities feel the impact

For employees and local communities, however, store closures carry immediate consequences. Workers at the affected California locations are reportedly being offered opportunities to transfer to nearby stores where possible, though such transitions are not always feasible for every employee.

Local shopping centers, already facing vacancy pressures, may also feel the loss. Department and off-price stores often function as traffic drivers, and their departure can ripple outward to neighboring tenants.

A sector in transition

The Marshalls closures arrive as the broader U.S. fashion retail sector continues to adapt to a post-pandemic equilibrium. Consumers remain cautious, balancing price sensitivity with convenience, while retailers face the dual challenge of cost control and relevance.

As the calendar year draws to a close, Marshalls’ move illustrates a defining reality of modern retail: growth is no longer about sheer scale, but about strategic precision. Closing doors in some places, opening them in others, and constantly recalibrating to where shoppers are — and how they choose to buy.

Whether this balancing act will sustain momentum in the year ahead remains an open question. For now, Marshalls’ latest decision underscores that even value-focused retailers are not standing still in a rapidly evolving marketplace.