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The right footprint for department stores like Nordstrom and Macy's is roughly 200 U.S. locations, preferably at the top 200 to 300 class-A and class-B malls, he said. Smaller stores like Gap with many more locations still have much further to cut, he added.

While retail consultants once projected one-third of retail activity would move online, many now believe a 50-50 split is more realistic, Boss said.

The problem is retailers only convert about 2 percent of online browsing to sales, compared with nearly 20 percent for in-store shopping, he said. Further, the most profitable visit for many retailers comes when shoppers go to a store to return an online purchase, opening the opportunity for additional in-store sales, he said.

But retailers face a "double-edged sword" because while in-store experiences are key to driving sales, rising wages create a challenge to getting staffing levels right, Boss said.

Yet another challenge, according to Boss: Nearly 70 percent of the brands these retailers sell overlap with those featured on Amazon.com.



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