Retail will fall

I walked into my local Super Target the other day and was thunderstruck. I just stood there at the front of the store that I had walked into many times, and saw for the first time just how massively, horribly, grossly inefficient retail stores are. I know, big shock right? But free markets, when operating properly, should remove such pronounced inefficiencies, so my thesis is that the retail empires must change or they will ultimately fail.
Think about this: what kind price hikes must a retailer have in order to make up for the lag and sell through rates in a store with tens of thousands, if not hundreds of thousands of items sitting on its shelves and hanging from its racks. We've always known that retail had huge markups, but it seemed as though it was a necessary evil - how else do you connect to the customer? Maintaining those inventory levels is the only reason why people shop there - if you can't find what you want on the rack, you leave.
As real estate investments, maybe brick and mortar stores still make sense, but even that is suspect. I'm sure the CVS and Walgreen's guys are thinking "Well, if this pharmacy thing doesn't work out, maybe we can sell these stores to McDonald's"... but who's going to walk into a vacant big box retail outlet once retail goes the way of the dodo? One local grocery store was recently converted into a church building - not something that you see every day, but you'll likely see similar odd phenomenon happening more and more frequently as retailing as we know it slowly recedes and is eventually replaced. But replaced with what?
It may sound like science fiction, or worse, 2000 bubble speak, but we've really only scratched the surface of what the internet will be used for in the future. When you start to add it up, there are a lot of things that have already been done to shake the foundations of retail. Things like Kindle for example, make book binding obsolete. MP3 players have replaced CD sales. On Demand video makes video rental stores and DVDs antiquated. The rise of service oriented sites with efficiently delivered products like Zappos are just now starting to pick away at the pesky clothing retailers. But it's inevitable that they'll win. To quote Flight of the Concords:

They're turning kids into slaves just to make cheaper sneakers
But what's the real cost?
Cause the sneakers don't seem that much cheaper
Why are we still paying so much for sneakers when you got them made by little slave kids?
What's your overhead?

What's your overhead? Are you positioning yourself to reap the benefits of the fall of retail as we know it? If you think that parking your category killer domain is doing you any good you better think again. Speaking of which, just over two days left to take advantage of the Domain Giveaway! What are you waiting for?