US Retail's Silent Killer, Exposed

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👋 Forever 21? Forever Gone. The retail apocalypse is claiming another 2,800+ stores as Forever 21, Joann Fabrics, Party City, and Big Lots all shut their doors in 2025. Why? Private equity firms loaded these once-profitable retailers with billions in adjustable-rate debt, then extracted value before the inevitable collapse.

Read time: 4 minutes | 861 words

STORY 

💰 Is Private Equity Dismantling American Retail?

In 2025, we're witnessing a massive wave of retail closures affecting well-known chains:

• Forever 21: Filed for bankruptcy in March 2025 (its second in six years) and is closing all U.S. stores

• Joann Fabrics: Closing all 800 stores by May 31, 2025, after two bankruptcy filings in less than a year

• Party City: Filed for bankruptcy in December 2024 and is closing its nearly 700 stores nationwide

• Big Lots: Initially filed for bankruptcy in September 2024 to sell to private equity firm Nexus Capital, but by December announced the closure of all remaining stores

What's particularly striking is that many of these chains had a significant number of profitable individual stores despite the overall corporate bankruptcies.

There's a common thread connecting these failures: private equity ownership. Research shows that private equity-owned firms are more likely to declare bankruptcy than their non-private-equity counterparts, often leading to mass layoffs (here’s a list of stores being closed due to private equity).

Tiffany Cianci, who has gone viral on TikTok analyzing this trend, draws a direct parallel between the current situation and the 2008 financial crisis. She argues that what's happening isn't just "retail struggling" but "financial arson" orchestrated by private equity firms using a "time bomb" set to detonate.

@tiffanycianci

🚨 This is 2008 all over again—but hidden in a black box. Joann Fabrics, Party City, Forever 21, Big Lots—ALL going bankrupt. But here’s th... See more

The business model of many private equity firms follows a common pattern: acquire a profitable business, saddle it with massive debt, extract value through fees and dividends, then leave the business to collapse when it can't sustain the debt payments.

The pattern typically works like this:

1. Acquire a profitable business (like Joann Fabrics, where according to Cianci, 97% of stores were profitable)

2. Saddle it with massive debt (e.g., $1 billion for Joann's)

3. Force the business—not the PE firm—to repay that debt

4. Extract value through fees, dividends, and other mechanisms

5. When interest rates rise or economic conditions change, the businesses cannot sustain the debt payments

Cianci draws a comparison to the 2008 crisis, arguing that PE is using "back floating rate debt"—essentially adjustable-rate loans similar to the adjustable-rate mortgages that contributed to the housing crash.

Authentic Brands Group (ABG) exemplifies this approach:

This model allows ABG to extract value from brands without dealing with the operational challenges of retail. When Forever 21 failed, ABG retained ownership of the brand's intellectual property while the operating company went bankrupt.

The concern extends beyond retail workers losing jobs. Private equity firms are selling this "junk debt" into pension funds, echoing what happened with mortgage-backed securities in 2008.

If these investments fail, retirees could lose savings, potentially amplifying the crisis to a scale Cianci estimates at $3.8 trillion exposure.

Cianci's analysis is informed by her personal experience. She was once the owner of a Little Gym franchise in Maryland. When Unleashed Brands, a private equity-backed company, acquired The Little Gym in 2021, she faced "skyrocketing fees, suffocating contracts, and corporate overreach." After organizing other franchisees to resist these changes, Unleashed Brands terminated her franchise, leaving her $300,000 in debt.

Not everyone agrees with this analysis. Some experts like David Sacco argue that inefficiencies and poor management—not private equity ownership—are the primary reasons for store closures. They contend that private equity often works to improve inefficient businesses.

What makes this situation particularly troubling is how it's happening largely out of public view, affecting not just retail but potentially the retirement security of millions through pension fund exposure to risky PE investments.

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INSIGHT

📣 5 Sales Lessons From Retail's Collapse

Private equity firms acquiring profitable businesses, loading them with debt, extracting value, and leaving them to collapse.

Here's what you can learn from this cautionary tale:

• Business relationships built on extraction rather than mutual benefit typically end badly. As a salesperson, focusing solely on making your numbers this month without considering the customer's long-term success will eventually backfire.

• Debt can be a tool or a weapon. PE firms use debt strategically to extract value, but excessive leverage makes businesses vulnerable to even minor market changes.

• The power dynamics in any relationship matter tremendously. When PE firms acquire companies, they change the rules of engagement to favor extraction. In sales, recognize the importance of power dynamics with clients and aim for balanced relationships that foster trust rather than exploitation.

• Most business failures happen gradually, then suddenly. These retail chains didn't collapse overnight—they were systematically weakened over years until a breaking point. Pay attention to warning signs with your customers and accounts before they reach crisis.

• Understanding the full system is crucial. The crisis demonstrates how interconnected economic systems are—retail failures affecting pensions, workers, and communities. As a salesperson, understanding your customer's entire ecosystem helps you provide solutions that address their actual needs, not just superficial symptoms.

While we can't control the broader economic forces at play, we can choose how we conduct business. The private equity retail crisis teaches us that sustainable success comes not from extraction, but from creating genuine value and building relationships based on mutual benefit.

ACTION

📝 Preventing Silent Client Churn

Business relationships rarely collapse overnight. Like retail chains before bankruptcy, the warning signs appear gradually, then failure strikes suddenly. Create an early detection system with these tactics:

1. Build a client health dashboard tracking engagement metrics, response times, and sentiment indicators

   • Examples: Monthly login frequency, support ticket volume, NPS score trends, feature adoption rate, invoice payment timing, meeting attendance rates, email response times

2. Schedule quarterly business reviews focused on value delivered, not just renewal conversations

   • Examples: ROI calculations, progress against agreed KPIs, success stories from their team, upcoming feature benefits aligned to their goals, strategic roadmap discussions

3. Monitor usage patterns and implement automated alerts when engagement drops below thresholds

   • Examples: "Red flag" alerts when logins drop 30% month-over-month, automated check-in emails for dormant accounts, notification when key champions haven't logged in for 14+ days

4. Establish a formal three-step escalation process for addressing satisfaction issues within 48 hours

   • Examples: Tier 1: Account manager call within 24 hours, Tier 2: Implementation specialist solution session, Tier 3: Executive sponsor involvement with remediation plan

5. Develop pre-emptive rescue protocols with clear ownership and accountability before clients reach cancellation stage

   • Examples: "Save team" with special pricing authority, complimentary training sessions, executive-to-executive outreach program, usage audit with personalized recommendation plan

Prevention costs less than recovery. Act on early signals.

MEME