Digitally native retailers have struggled to find the right balance between selling online and opening brick-and-mortar stores. Having a physical retail store allows customers to try out products, which may lead to them becoming regular online customers.
For example, I purchased my first Untuckit shirt after trying it on in-store. Since then I have purchased from the company’s website multiple times.
However, brick-and-mortar chains cost money and can be a drag on profits compared to online-only operations. Maintaining the cost advantage of a digital enterprise while finding ways to get customers exposed to your products can be a challenge.
The challenge poses problems for Allbirds, a pioneering shoe company that started out as a digital-first brand. At its peak, the company had more than 60 retail stores, but now it is slashing the number of physical stores in pursuit of profitability.
Allbirds will close all full-price stores at the end of February.
“The company will close its remaining full-price stores in the United States by the end of February 2026, allowing Allbirds to devote resources to its e-commerce platform, wholesale partnerships and international distribution rights, all of which provide greater reach, flexibility and operating leverage,” the company said in a press release.
The company made the change as part of a broader effort to return to profitable growth.
“The company expects these closures to be a capital-light effort and will discuss expected SG&A savings and related cash charges during its fourth quarter/full-year 2025 earnings call, expected to be held in March 2026,” it added.
Digital-first bedding and homewares brand Parachute Home closes 19 of 26 stores According to Business Insider, the company has refocused on e-commerce and wholesale partnerships with retailers like Target and Nordstrom after physical retail proved unprofitable.
Amazon to close all Amazon Go and Amazon Fresh storesAccording to the Wall Street Journal, this reflects an effort to expand certain technology-focused retail formats originally associated with digital innovation.
Some digitally native brands, e.g. Warby Parker and Outdoor Voices opened brick-and-mortar stores, but then reevaluated their footprints The International Council of Shopping Centers (ICSC) said it was part of a broader industry re-evaluation of the cost and complexity of physical stores.
Many retailers are finding they need some physical presence.
“There’s only so much that can be done online,” Beta Agency partner Rob Ury told ICSC.com. “There are some products that people want to experience and touch, like leather, which has a warm and welcoming smell when you walk into the store.”
However, finding the right balance can be a challenge.
ICSC said, “There is some resistance. DNBs that operate brick-and-mortar stores and may face bankruptcy include Sleep Number, Rent the Runway and Peloton, according to an October 2024 report from Health Merchant Services citing a CreditRiskMonitor report.”
Allbirds will close most of its physical stores.Shutterstock ·Shutterstock
Allbirds has decided to close all of its traditional full-price stores in the United States, leaving only two company-owned stores and two stores in London. At its peak, the company had 61 retail locations.
The closure will be completed by the end of February. Allbrids said in a press release that the closure is to allow the company to “invest resources into its e-commerce platform, wholesale partnerships and international distribution rights, all of which provide greater reach, flexibility and operating leverage.”
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CEO Joe Vernachio believes these moves are necessary to make the company profitable.
“This is an important step for Allbirds as we drive profitable growth under our turnaround strategy. Over the past two years, we have been opportunistically reducing our physical product portfolio. By exiting these remaining unprofitable doors, we are taking action to reduce costs and support the long-term health of the business,” he said.
Digitally native brands have struggled to open physical stores.
Jason Goldberg, chief commercial strategy officer at Publicis Groupe, told ICSC: “Generally speaking, brands that view channel-to-market as a defining strategy, let alone a competitive moat, tend not to work. They will find that this strategy is “unlikely to make them a winner on its own.”
Some retail experts still believe it’s important to have some physical stores.
Neil Saunders, managing director of GlobalData Retail, told Retail Dive: “The main risk is that without a physical store, it will be harder for some to establish a presence and win over new consumers. Online is a very crowded space, and physical stores can help cut through the noise and give more meaning to DTC brands.”
He did note that brick-and-mortar stores “won’t necessarily provide immediate relief for brands that have struggled to turn a profit for years.”
Additionally, running a brick-and-mortar store requires different expertise than running a digital operation.
RetailBoss said: “Brands are rushing to retail expansion without building the operational infrastructure to support it. They are applying digital-first thinking to brick-and-mortar-first problems.”
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This article was originally published by TheStreet on February 5, 2026, and first appeared in the Retail section. Click here to add TheStreet as your preferred source.
Allbirds will close most of its physical stores.Shutterstock