24/7 Wall St.

A new estimate of the power of e-commerce forecasts that 32% of U.S. retail sales will be done on the internet by 2030. Shopping centers, already hollowed out of many of their largest brick-and-mortar tenants, may fail unless they substantially change the way they do business.

According to a new study from consulting firm A.T. Kearney titled “The Future of Shopping Centers”:

Historically, malls, shopping centers, and even “collections” (in the case of Somerset in Troy, MI, for example) have been thought of as aggregations of retail offerings arranged in a variety of formats from strip and open-air to fully enclosed. But times have changed. E-commerce is projected to account for a third of retail sales by 2030, forcing center operators to explore what should be done with existing—and future—construction.

That means e-commerce revenue will hit $1.53 trillion, up from $342 billion in 2015.

Among the reasons for the collapse of malls is that too many were built recently, The authors point out: The United States is dramatically overstored, especially compared to nations such as the United Kingdom where urban planners place a limit on the ratio of real estate to people. There are approximately 24 square feet of commercial retail space for every American, compared to 5 square feet per person in the UK, 3 square feet per person in China, and about 2 square feet per person in South Korea. Some of this has to do with how retailing evolved in other nations.

For shopping centers to survive, they will need to have traditional retailers married with other facilities that will draw customers to experiences beyond simply shopping:

Whatever you choose to call retail-based real estate in the future—malls, centers, collections, or CESs—they will be environments where people gather to engage with friends, connect with like-minded shoppers, seek out unique experiences, reaffirm values, and interactively relate to brands on a personal level. Transactions will be a by-product of consumer socialization and engagement. CESs may resemble today’s shopping centers and malls or they might look quite different. Traditional retail stores may anchor them or they may be anchored by purpose-built specialty residential living units, an entertainment complex, sports center, educational institution, or healthcare facility, or even organized around a theme or concept.

“CES” is Kearny’s term for the shipping destination of the future: consumer engagement spaces.

What is left open in the Kearney report is how many malls have the capital or capacity to change radically from simple collections of stores to “destinations” with large numbers of non-shopping options available. As malls lose their customers, which means a sharp loss of revenue, the answer is not many.