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It's only February, but we've already seen enough to declare 2015 the year of the big shrink in retailing.

Hundreds of stores are being shuttered, tens of millions of square feet of store space vacated and some venerable retail names are set to vanish.

Target Corp.'s stunning retreat from Canada is a lagging indicator of some powerful trends that are reshaping the North American retail landscape.

Entire categories of products are moving online, making many bricks-and-mortar stores redundant. Video and book stores are all but gone. Office supply, electronics and department stores are in retreat. A future without auto showrooms and movie theatres may be coming.

The era of the big-box store has peaked as city dwellers move back downtown, where space is at a premium.

And the baby boom generation is entering its downsizing years, causing people to shed possessions, not acquire them. Big suburban homes are out, condos are in.

Combine that with a post-recession hangover of stagnant wages, sluggish job growth and high debt loads, and you have all the ingredients of a pretty grim retail environment.

Many retailers are fighting for their survival. The list of retail failures in recent months is ominously long. In addition to Target, several other prominent chains are closing their doors or seeking bankruptcy protection in Canada, including Sony, Jacob, Smart Set and Mexx. Sears Canada has been in a downward spiral for some time.

Consolidation is even more advanced in the United States, where Internet shopping is more prevalent and price competition intense.

In the U.S., office-supply dealer Staples is buying another, Office Depot, less than two years after acquiring OfficeMax. It's a case of one shrinking chain merging with another shrinking chain. Even if antitrust regulators reject the latest merger, both chains insist they will continue to shed stores, closing 360 locations between them this year.

And last week, 94-year-old electronics chain RadioShack filed for Chapter 11 bankruptcy protection in the U.S. The company tried to remake itself as a mobile-phone retailer, but it's been losing out to more savvy rivals Apple, Amazon and Best Buy.

In a healthy environment, survivors would be celebrating, eager to scoop up the vacant space amid all this consolidation. That isn't necessarily the case in the aftermath of Target's retreat.

Wal-Mart Stores Inc., Canadian Tire Corp. Ltd. and Loblaw Cos. Ltd. will no doubt pick up some of the 133 Target store leases.

But one of the key lessons here is that many of these 133 locations simply aren't needed, by anyone, because the country is over-stored. Many former Target locations could wind up being chopped up and leased to an array of smaller users.

Wal-Mart is often identified as the biggest winner as Target leaves Canada. And yet its spending plans suggest relatively modest ambitions. Wal-Mart announced this week that it would spend $340-million in 2015 to expand in Canada, down nearly 50 per cent from planned 2014 spending. And much of the money will be spent, not on new stores, but on its distribution network, its online store and adding space for groceries.

Like Wal-Mart, retailers are dedicating more of their floor space to food because it's one of the dwindling product types that consumers still want to see and feel before they buy. Shoppers Drug Mart, acquired by Loblaw last year, has revamped a handful of Toronto stores to sell fresh foods for the first time. The company plans to extend the pilot to Regina this spring. Food items cover up to a third of the floor space in the pilot stores.

Physical locations still have a place. But retailers are being much more strategic in their use of stores, particularly in cities where real estate values are high and space is at a premium. Stores may become less about showing products – a function that is easier and cheaper online – and more about distribution and service.

E-commerce, already growing by double digits annually in Canada, is steadily gaining ground as online retailers get better and faster at delivering goods to consumers.

Target's ill-fated Canadian sojourn is more than a story of a company barging into a foreign market it didn't fully understand.

It's about a company swept up in transformational change it should have seen coming.