Michaels Expands as Joann and Party City Shutter in Bankruptcy

The Retail Industry's Struggle: Bankruptcies and Store Closures

The retail industry has faced significant challenges in recent years, with a sharp increase in bankruptcies and store closures. This trend has left many shoppers without access to their favorite stores, marking a shift in the retail landscape. The impact of these changes is felt across various sectors, from specialty retailers to major chains.

The onset of the COVID-19 pandemic was a major turning point for the retail sector. Many businesses were forced to close their physical locations, leading to a dramatic drop in sales. For numerous companies, this decline proved insurmountable, resulting in permanent closures or financial distress. Even those that managed to survive the initial wave of the pandemic encountered new obstacles in the following years.

One of the most pressing issues has been inflation. Rising costs have placed a strain on retailers, squeezing already slim profit margins. At the same time, consumers are facing higher living expenses, which have led them to reduce spending on nonessential items. This double whammy has had a significant impact on retail sales, further contributing to the current crisis.

Inflation remains a persistent challenge, even as it may not appear as severe as it did in 2022. The cost of living continues to be high, and the potential for new tariffs adds another layer of uncertainty for both businesses and consumers. As a result, people are likely to be more cautious with their spending in the coming months.

Notable Bankruptcies in 2024 and 2025

Several well-known retailers have fallen victim to financial difficulties in recent years. Party City and Joann are two prominent examples. In December 2024, Party City filed for Chapter 11 bankruptcy for the second time. The company experienced a steady decline in sales and ultimately could not sustain its operations. In early 2025, Party City began closing stores, leaving many of its leases available for new tenants.

Joann, a major player in the fabric industry, also filed for bankruptcy in January 2025. This marked the company’s second time filing for Chapter 11. Inventory challenges played a significant role in this decision, but declining sales were also a factor. Like Party City, Joann made the difficult choice to close stores, which has disappointed many loyal customers.

Michaels Thrives Amidst Competitor Struggles

Despite the challenges faced by the retail industry, some companies have found ways to adapt and thrive. One such example is Michaels, a major crafts retailer. While Michaels has not been immune to store closures, it has managed to avoid the same fate as its competitors like Joann and Party City.

Michaels has taken strategic steps to capitalize on the opportunities presented by its competitors’ struggles. It recently acquired Joann’s intellectual property and private label brands, allowing it to expand its product offerings. Additionally, Michaels has expanded its line of party supplies, introducing new balloon designs and event bouquets to fill the gap left by Party City’s closure.

These moves have proven successful, as Michaels has seen an increase in customer traffic. The company reported a 2.3% rise in same-store sales for the quarter ending in May. With over 500 new party supply items added to its inventory this year, Michaels is well-positioned to continue growing its market share.

The Future of Retail

If Michaels continues to strategically expand its product lines and enhance the in-store experience, it may be able to avoid the fate of other struggling retailers. This would be a positive development for crafting enthusiasts who have watched several beloved stores close in recent years.

As the retail landscape continues to evolve, it remains to be seen how other companies will navigate these challenges. However, the success of certain retailers, like Michaels, offers a glimpse into what may be possible with the right strategies and adaptability.