Between stuff like this and the juggernaught that is Amazon, it's hard for me to see how traditional retailers are going to survive outside of certain small niche markets.
Where traditional retailers can thrive, is in the H2H (human-to-human) market. Make traditional retail be a destination for the local community by organizing events related to their business, and make the actual business (retail) be the side affect of it. It may not be as profitable as they used to be, but they can remain relevant and even thrive.
Radioshack comes to mind, they could have reclaimed their #1 destination for hobbyists by repurposing their shops as hacker spaces.
I think this is why bookstores even still exist. I know they've reduced greatly in number, but every time I'm in one, I see people sitting with friends, drinking coffee, browsing books.
Fewer stores, stronger community, larger profits :) It's like email newsletter marketing... give away your content free to the 98%, the other 2% will buy your premium priced items and more than make up for the rest.
Depends what you mean by "traditional". Traditionally, retailers have always been about niche markets in one form or the other, originally simply geographically.
The massive chains are going to get buried, but I wouldn't call those traditional. And I won't miss them polluting the high streets either.
Radioshack comes to mind, they could have reclaimed their #1 destination for hobbyists by repurposing their shops as hacker spaces.