Learn Italian: Quel negozio è chiuso.

When used before a noun, quello changes its shape to match the definite article ("the") that the noun would take. Because negozio is a masculine word starting with a normal consonant, it takes the article il (il negozio). Therefore, quello shortens to match it, becoming quel. You would only use the full word quello before masculine nouns that take the article lo (like lo specchio, which becomes quello specchio).

What would this sentence look like in the plural ("Those shops are closed")?

It would be Quei negozi sono chiusi. Just like quel acts like the article il, its plural form quei acts like the plural article i. Notice how negozio and chiuso both change their endings to -i to become plural as well.

Why does chiuso end in -o?

Chiuso is an adjective describing the shop, so its ending must match the noun. Since negozio is masculine and singular, chiuso takes the masculine singular -o ending. If you were talking about a feminine word, like a door (porta), you would say Quella porta è chiusa.