Dive Brief:

• Retail analyst Jan Kniffen Thursday said on CNBC’s “Squawk Box” that e-commerce sales will reach 50% of apparel sales in a dozen years or so, and that brick and mortar retail will have to adjust by closing stores. He called Amazon the “biggest gainer in apparel.”

• While America currently has about 1,100 enclosed malls, Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, said that number should be around 700. “The top 250’ll do fine, and the rest of them are going to struggle,” he noted.

• Kniffen also said that the U.S. is the most over-stored country in the world. Number two, the U.K., has half the stores per capita when compared to America, he said. And that doesn’t include e-commerce, which he says worsens the situation by another 10%.

Dive Insight:

Kniffen said that Macy’s, while a healthy company with good cash flow and valuable real estate yet to leverage, will likely need to reduce its 800-or-so store fleet to more like 500 or 550. Kohl’s and J.C. Penney, which together have some 2,200 stores, need more like “1200 or 1300 between the two of them.”

In his own comments to CNBC’s “Squawk Box” last year, Macy’s CEO Terry Lundgren acknowledged this issue, saying that that changing consumer behaviors were driving the retailer’s decision to close 14 stores. 

“We’ve announced that we’re actually going to be closing more stores this next year because as the Internet has become so strong for us, consumers are looking at their options, determining where they’re going to shop. And they don’t have to have that immediate convenience of going to the store next door,” Lundgren said. “They’ll drive a little bit further and they’ll also know that we’ll deliver it to them in a very short period of time. So I think when you put all those options together, we’re able to say that we don’t need 800 locations across the country. We can have fewer than that.”

But the level of scale-down described by Kniffen will impact the emerging omnichannel approach favored by many shoppers. Driving down that number of stores would no doubt impact retailers' ability to provide different kinds of fulfillment, like in-store pickup, returns, or same-day delivery. And fulfillment for online orders, which, since it takes packaging and shipping, will continue to be expensive and hit retailers’ bottom lines. That could mean that investors, in addition to consumers, would have to adjust their expectations of their retail investment returns.

“The notion of building a business that really is a great business that serves a defined customer set—I think we have lost sight of that,” Doug Stephens, author of The Retail Revival: Re-Imagining Business for the New Age of Consumerism and the Retail Prophet blog, told Retail Dive last year. “We’re seduced by this notion if I’m an investor and I'm not getting double digits I’m not happy. When did 5% growth become a bad thing? It’s greed on the part of markets and the companies, and leads smart people away from making good decisions.”

Kniffen also noted that while many observers accept the fact that younger people are buying fewer clothes, they actually have the same amount of clothing hanging in their closets as Baby Boomers did at the same age. But they’ve been able to stock their closets at much lower prices. That explains department stores’ traffic woes: Millennials and teens are getting their things at lower-priced fast-fashion retailers and at off-price stores like those run by TJX Cos. 

Retailers and malls must provide the merchandise and customer experience that brings them to remaining stores. More successful malls are already shifting to include a greater mix of businesses, including restaurants, health care clinics, and gyms.