Overall retail space could be reduced by between one-third to one-half over the next ten years, forecasts industry watcher Michael Burden.
The harsh assessment could indicate the round of store closings from Sears Holdings (SHLD), J.C. Penney (JCP), and Macy's (M) is only the tip of the iceberg. Watch for American Eagle Outfitters (AEO), Aeropostale (ARO), Dillard's (DDS), Nordstrom (JWN), and Kohl's (KSS) to enact some logical downsizing, while even Wal-Mart (WMT) and Best Buy (BBY) could surprise with some paring.
Analysts think stores at malls will be shuttered faster than open air outlets.
What to watch: Vibrant brands such as Michael Kors (KORS), Lululemon (LULU), and Vince (VNCE) could shift into a standalone mode as consumer demand stays strong for their on-trend products, but mall metrics trend weaker.
Retail ETFs continue to under-perform market indexes for the year as the hits keep coming in the sector. Today's dismantling of Best Buy follows up a relentless string of guidance cuts from apparel sellers and department store chains.
Though many companies are taking advantage of their vibrant e-commerce channels, in most cases it's not enough to make up for soft store traffic.
Weakness at malls in particular is a risk for the group. In that vein, five of the top ten holdings (FRAN, ANF, M, FINL, CAB) of the S&P Retail ETF (XRT) are companies that frequently set up shop at or near malls.