When I was a child, my town had two thriving malls. One was driven by its sheer size, while the other relied on strong anchors and a major movie theater. Today, the smaller mall has been reduced to small shoe stores and smoothie bars, while the larger mall has consolidated its power.  It's a story that has played out across America, as malls are fading from fashion.

Some analysts have estimated that half of the country's malls will eventually shutter their doors, leaving the businesses that rely on mall traffic searching for new answers. Already, the slowdown in traffic is forcing companies like J.C. Penney (NYSE:JCP) and L Brands (NYSE:LB) to rethink their strategies and approach to customers. 

Inside an abandoned mall in Florida. Source: Flickr.com user Brett Levin

Since 2010, mall traffic has fallen over 15%, according one estimate, and the stores with a strong mall presence are feeling the pinch. America is home to around 1,000 malls, and many companies have built their businesses on those malls, putting the vast majority of the pinch on their sales and earnings. 

In the new world, malls are seeing consolidation just like many other businesses. Larger models are taking a bigger share of the pie, while smaller, regional malls continue to underperform. Online sales are taking a fair share of business, but shoppers are also tighter with their cash, leading to fewer impulse purchases, which mall stores often rely on.

The result has been an increase in promotional activity in the malls, leading to a decline in margins, and a tenuous grip on foot traffic. If that trend continues, it won't just be malls that take a hit. Companies that rely heavily on foot traffic are going to take a dive, as well.

Anchor stores on the way out
The last things holding malls together are the same things that the malls were originally built around. Anchor stores are typically larger department stores or retailers that bring in a wide range of shoppers. J.C. Penney is a perfect example of an anchor store.

The company has amassed billions in real estate that it has used to secure lending facilities.  Those funds are pushing the company's turnaround, but in 10 years, they might not be so easy to come by. As malls fade, the value of those anchor locations will begin to slip, putting businesses in a bind if they're heavily reliant on the value of those assets. J.C. Penney knows that this is a growing problem, and in one of its most recent SEC filings, the company said, "A substantial majority of our stores are located in malls, which have been experiencing a decline in traffic."

Clearly, J.C. Penney has more pressing issues than the long-term health of the American mall, but it's a hurdle that company is going to have to clear at some point. Being an anchor may simply mean that the decision is deferred until it's made by a landlord, as malls begin to actually close.

Inside the mall
While anchors may be clinging on to the last vestiges of dying malls, businesses in the mall are taking their business elsewhere as quickly as they can. L Brands, owner of Victoria's Secret and Bath & Body Works, is a mall staple, but not an anchor.

The company is assuming that traffic over the next year will be flat in malls, but that's likely to be a temporary situation that's going to get worse. In the long run, traffic is going to pull back, leaving big mall brands suffering. Victoria's Secret is primarily mall-based, but the company has been pushing for online and catalog -- what it calls "direct" -- growth in the last few years. Unfortunately, comparable direct sales are slow to grow.

Victoria's Secret's direct channel actually had a drop in sales last year, due to weak holiday sales. It's a trend that is going to be much more worrisome as time rolls on and the company is forced to shift or close locations as malls drop to the wayside.

What it all means for the mall
The news that big-box stores are being overtaken by Internet retailers isn't news, but for some reason, we don't think of malls as boxes. In reality, they represent a bygone era of suburban life. America is shifting out of the burbs and into the city, leaving behind the cheap real estate that fueled a boom in mall construction.

Companies that want to stay ahead of the curve are going to have to trim their exposure to the typical mall. While the biggest shopping centers may continue to thrive, smaller locations are going to keep suffering.

Victoria's Secret can push its online presence, as it has been, in order to keep its brand strong. Companies that are more heavily invested, like J.C. Penney, should start to consider the value of the family silver. The billions in real estate that it holds now in stores and ground leases could easily shrink soon. If those companies sell their weaker assets before the mall collapses, they may make out like bandits -- it's all a matter of timing and finding a buyer.