The retail meltdown triggered by the coronavirus pandemic will get worse before it gets better, but things will get better.

The weakest malls and retailers will die off, making way for new uses of empty stores and shopping centers.

That was the consensus of a panel of retail and real estate experts who participated in a virtual conference on the future of retail Wednesday, hosted by global real estate firm Hines.

Hines gathered the group to get their thoughts on the future of retail during “what might be the most challenging headwinds ever to face our industry”, said Kenton McKeehan, senior managing director, retail resources group at Hines, who moderated the discussion.

The panel included Valerie Richardson, vice-president, real estate, Container Store TCS -2.3%; Duncan Paterson, principal and mixed use leader at design and architecture firm Gensler; Neil Saunders, managing director, retail and consumer, GlobalData; Lee Timmins, chief executive officer, Eurasia region, Hines; and Peter Epping, senior managing director, investment management, Hines.

The group agreed that retailers haven’t yet seen the full impact of the pandemic, and that the short term pain is likely to be intense, with more retail bankruptcies and mall closings. Saunders said GlobalData estimates that up to 20 percent of U.S. malls may close, and that more Ch. 11 retail filings are likely.

“We’ve got a bit more distress to come, unfortunately,” he said.

But Saunders and the other panelists emphasized that the retailers and malls in trouble now were struggling before the pandemic, and that the strong retailers and best malls will survive.

Here are the top five take-aways from the discussion:

The pandemic won’t kill physical retail

While the pandemic has boosted online sales, panelists said they don’t see it overtaking in-store sales. While there have been reports that online sales will grow to 50% of retail, “None of the data shows that,” Sauders said. At the peak of the lockdown, he said, online penetration for non-food items was only 32%. That percentage declined as stores reopened, and fell to 24% in the United States in June.

“We know from our data a lot of people postponed purchases because they want to go into the store and see those things and just didn’t want to buy it remotely,” he said.

When customers are shopping for a solution to a problem, and when they need help from a salesperson, stores work better than online, said Valerie Richardson of the Container Store.

If a high level of customer service is needed to make a sale occur. “it’s better delivered in a brick and mortar setting,” Richardson said. “It’s very hard to sell a problem solution on the web. It’s not a solution solving vehicle. It is an item selling vehicle.”

Outdoor malls have the advantage

Hines executives Lee Timmins, who is based in Moscow, and Peter Epping, based in London, have seen consumers in European and Eurasian countries gravitate more toward open air shopping centers as stores reopened. In Moscow, Timmins said, Hines has seen a significant difference between its enclosed mall, which still was down about 35% in July in terms of year-over-year traffic, compared to open air outlet centers, which were up compared to the previous year.

“While people are concerned about health and safety they would like to stay outdoors and to be able to do that kind of shopping as opposed to going into a closed mall. So we think the recovery on the closed mall is going to take a while,” Timmins said. Hines is looking at adding rooftop experiences to an enclosed mall in Moscow to create more outdoor space.

Duncan Paterson, of architecture and design firm Gensler, agreed that the “need for outdoor experiences” is particularly strong now.

He noted that in Santa Monica, CA, the city closed off a stretch of one of the main streets and let restaurants set up tables and serve meals in the street. “It was like a street party and everything was mobbed,” he said.

“Creating natural environments that people are going to feel comfortable in is going to be the first step to survival,” Paterson said.

Still betting on live, work, shop mixed use

Despite the pandemic raising questions about the future of office space, and of the economy, McKeehan said Hines is still bullish on the prospects for mixed use projects that combine retail with multifamily residential, office, and hotel and entertainment spaces.

Paterson also sees increased demand for residential, and says there is growing demand for converting traditional malls into residential mixed use.

“When we come out of Covid we will still have a very large percentage of people who are going to choose to work at home, even if it is just one to two days a week, which tells you that shopping habits are going to change,” Paterson said. “Retail being close to residential and multifamily becomes more important.”

Experiences matter, but the pandemic has redefined them

Shoppers still want experiences, but that doesn’t necessarily mean indoor roller coasters or water parks. Simpler pleasures, like outdoor dining options, outdoor concerts and public spaces, and family friendly activities, or browsing in a great interactive supermarket like Wegman’s in your shopping center are the experiences shoppers are craving now, panelists said.

Retail survival of the fittest

“This is a process of evolution,” Saunders said, noting that the retailers who are failing now were the ones that were weak before, that “didn’t have a clear customer in mind.” The same holds true for malls, he said.

“Sure this pandemic has accelerated that, and made some very painful scenarios and outcomes, but there should always be turnover,” he said. “Why should all the malls we’ve ever built survive?”

Many of the old mall anchors, Saunders said, “were not very good retailers. They are not in the vanguard of retail innovation.”

The question for malls now, he said, is who are the new anchors. “Who do you put in to the space to pull people in?”

“The day of cookie cutter malls is gone. The idea that there’s a mall template and you have certain anchors – the JC Penneys JCP -3.6%, the Macys M -1.5%, the Sears – that model is so much less applicable.”