They add that competition from Internet retailing will also have a damaging effect on retail property values, hitting asset valuations which traditionally support retail share prices.
This has already happened in the US where some Internet retailers such as online bookseller Amazon.com are worth more than high street rivals such as Barnes & Noble. "You could get to the stage where some of these properties are almost worthless," says one retailer.
Nick Bubb, retail analyst at SG Securities, says shareholders should brace themselves for more bad news. "Investors do need to start thinking about the possibility of lower dividends. Profit margins are on a structurally lower trend and dividend cover is under pressure. Pay-outs will have to be cut."
The trend has already started with Storehouse, the struggling Bhs and Mothercare retailer, passing its dividend completely last month after it reported a pounds 22m loss. Hamleys , the toy retailer, cut its pay-out by a third in October after it reported a slump into loss.
Other retailers tipped to cut their dividends include Arcadia, House of Fraser, Great Universal Stores and Monsoon. Ottakar's, the bookseller which is examining its strategic options after a profits warning last week, is unlikely to pay a final dividend.
There is continuing speculation that Marks & Spencer will cut its final pay-out despite hints from the company two weeks ago that it might pay a maintained dividend from reserves.
Arcadia, led by John Hoerner, is the most likely major retailer to cut. After a profits warning last month, the shares yield 13 per cent. The group paid out a full-year dividend of 11.7p per share last year but Williams de Broe and Gilbert Eliott are forecasting a cut to 8p and 6p respectively. SG Securities has reduced its dividend forecast from 11.7p to 5p.
House of Fraser is not forecast to reduce its dividend but with cover down to just one times it must be under threat. Cover at Great Universal Stores is also becoming thin after last week's profits warning which wiped 20 per cent of the shares. They now yield 6 per cent.
Marks & Spencer would be the biggest retailer to cut its pay-out. Two weeks ago Robert Colvill, finance director, appeared to be steering the markets away from expecting such a move, saying: "Remember, we have a strong balance sheet."
But several brokers including SG Securities and West LB Panmure are forecasting a drastic cut in the dividend from 14.4p per share to a range of 6p-7p.