From left: John L. Bucksbaum, chief executive officer, Bucksbaum Retail Properties, LLC; Steve Morris, president and co-founder, Asset Strategies Group; Dana Telsey, chief executive officer and chief research officer, TAG – Telsey Advisory Group; and Mike Moriarty, partner, A. T. Kearney, speak at the ULI Fall Meeting in New York City.

On the same day that Target announced free shipping for all online orders placed during the 2014 holiday season, a 2014 ULI Fall Meeting panel discussed who is “really winning” market share in retail: brick-and-mortar or online stores?

According to research presented by the panelists, the current situation is a win-win for both camps: the nation’s most successful retailers are artfully combining their physical stores with online shopping sites. “Are web customers different from those who shop in physical stores?” asked Steve Morris of Asset Strategies Group. “It turns out that they are nearly identical. People like to be in an omni-channel shopping environment, and it’s amazing how quickly retailers have adapted to handle this change.”

Timing is everything, noted moderator John L. Bucksbaum of Bucksbaum Retail Properties. “Since the year 2000, people have said that the shopping mall is dead due to e-commerce, but that’s not completely true,” he said. While Bucksbaum was serving as chairman and CEO, General Growth Properties invested $65 million in wiring all of its shopping malls to facilitate online sales and use physical stores as fulfillment centers. “It was a failed experiment because it was ahead of its time,” he recalled.

Fast-forward to 2014 and there’s a new “balance” between online and offline shopping, said Morris. His company’s recent survey of some 20,000 customers revealed that 90 percent of everything sold in the United States goes through a physical store. Of the remaining 10 percent of sales, 50 percent is through websites operated by retailers who also operate physical stores. That leaves just 5 percent of sales that take place solely online—and 67 percent of those sales are to shoppers who visit shopping malls at some point. “The mall is not dead,” Morris declared. “Rather, online shopping is the best thing that’s happened to the mall.”

Another survey cited by Morris showed that a third of American consumers do all their shopping in physical stores, while another third research potential purchases online before buying them in physical stores. Of the remaining third, most do both research and shopping online, but go to the physical store to return purchases. “So value is created in a different place from where value is captured,” he explained. “Almost every time someone returns a purchase at a physical store, they walk out with something else.”

It’s not just e-commerce that’s changing the way people shop, stated panelist Mike Moriarty, a partner at A.T. Kearney and coauthor of the book On Solid Ground: Brick and Mortar Is the Foundation of Omni-Channel Retailing. “The rise of e-commerce is part of a much bigger transformation of the retail industry, as the country becomes grayer, more urban, more diverse, and more obese.”

Other changes affecting the industry, added Morris, include social media as well as the shopping habits of millennials. “The millennial cohort is the same size as the baby-boom generation, but they don’t have as much money. They love to shop and they shop everywhere. They understand brands through their extensive use of social media; for example, Lululemon doesn’t have to be in a shopping mall to attract customers because of its huge presence on social media.”

While physical stores have an important role to play, they face new limits due to the rise of e-commerce. “It used to be that if you give retailers more square feet, they will be able to sell more merchandise,” said Dana Telsey of Telsey Advisory Group. “But now, retailers have maxed out their number of stores. They increase sales primarily through online channels.

“The profitability of omni-channel marketing is narrowing,” she went on, pointing to Target’s announcement of free shipping for all holiday purchases. “This means that retailers must know their customers better, and get better at explaining their products. Yes, we are seeing store closings, but we also are seeing more effective stories that operate more productively than they did in the past.” Morris added that retailers are shrinking the amount of physical space that they occupy not just due to e-commerce, but also because they are losing market share to big-box retailers and discounters.

So what exactly is the role of brick-and-mortar stores going forward? The key to success, panelists agreed, is the customer experience. “In a shopping mall, it’s about curating a collection of retail stores and restaurants in a way that customers can’t find anywhere else,” said Moriarty. “Stores are increasingly engaged in ‘guideposting’—they don’t care if customers touch everything in the store and then order online, as long as they order from that store’s website.” He noted that Williams-Sonoma is reducing its total number of stores but increasing their size in order to “wow” walk-in customers with cooking demonstrations and product displays. Morris pointed out that Apple could have outsourced its “genius bar,” but instead chose to create the experience of walking into the store—even waiting in line to walk into the store—and feeling the product-related excitement.

So if everyone is winning with e-commerce, is anyone losing? That would be the B- and C-class shopping centers and strip malls, which, according to Bucksbaum, are “not overbuilt—just under-demolished.” “They die very slowly,” he noted. “Even with a low level of sales per square foot, they continue to make money.” But these second-tier shopping destinations also could benefit, panelists agreed, by implementing the successful principles of omni-channel marketing and sales.