With Neiman Marcus up for grabs, and speculation that JCPenney and Saks Inc. are in play, experts say it's the beginning of the beginning, calling it the metamorphosis of an overstored nation.

“It's a metamorphosis of the retail landscape,” says Marshal Cohen, chief retail industry analyst with NPD Group, a Port Washington, N.Y.-based marketing firm that tracks industry information. “It's a time to determine whether your brand is worth more by selling it than keeping it alive.”

Financial and strategic buyers are cash-rich and interest rates remain near historic lows, making for an attractive M&A and divestiture market, according to Citigroup retail analyst Deborah Weinswig.

In the past several years, hedge fund magnate Eddie Lampert bought Kmart, then Sears, and it began a spate of activity, to include partnerships with real estate investment trusts, such as the recent Kohlberg Kravis Roberts & Co., Bain Capital and Vornado Realty Trust deal to buy Toys ‘R’ Us announced last March.

“From a retailer's perspective, longer-term growth prospects are limited, especially mall-based retailers due to the lack of mall growth,” Weinswig said in a recent investment report. Conditions are ripe for luxury retailer Neiman Marcus, whose execs said the company is considering strategic alternatives. The Texas-based chain hired Goldman, Sachs & Co., the New York investment banking firm as its adviser.

Weinswig believes a deal is “imminent” for Neiman and its 37 stores to include Bergdorf Goodman. She pegs any transaction worth an estimated $4.75 billion to $5.4 billion. She predicts prospective buyers to be KKR (see story on page 48) and Bain, and Thomas H. Lee Partners and Blackstone Group, in the report.

Neiman is still riding the luxury boom and the U.S. dollar is in decline, international retailers could also be lining up, such as Galeries Lafayette SA, France's largest department store chain.

Also on the block could be Saks Inc. and JCPenney, experts predict.

Saks could be split in parts, or sold in its entirety to an investment group or perhaps even Galen Weston of Canada, who was said to be a bidder for Saks Fifth Avenue a few years ago, Weinswig noted in the report.

Apollo Advisors is also cited by industry sources as interested in Saks' Department Store Group, according to Weinswig, who thinks the regional department stores could fetch as much as $2.59 billion from a buyer or buyers, or the total company for up to $4.76 billion.

The stagnating group, including Parisian's and Carson Pirie Scott, could look attractive to regional players such as Arkansas-based Dillard's or privately-held Belk of Charlotte, N.C., who could expand their presence throughout markets they're not currently in.

Though JCPenney disclosed long-range growth plans, it, too is a rumored takeover target. It's worth an estimated $19 billion at the top range, Weinswig wrote in the report.

Fueling rumors is former Penney exec Vanessa Castagna's move to Mervyn's. Target sold its ailing Mervyn's unit for $1.2 billion last year to Sun Capital Partners Inc., Cerberus Capital Management and Lubert-Adler and Klaff Partners.

“I don't rule anything out,” Cohen said. “It's very likely that if an attractive offer comes forth, the board has a responsibility to vote on it.”

But any buyer of JCPenney or Neiman would be paying top dollar with tremendous risks attached, says Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm headquartered in New York City.

Davidowitz, who thinks Mervyn's is a cadaver, also questions the economics of these deals. For one, he says luxury is “cyclical,” and a “mature segment.”

Consumers racked up a lot of debt and the refinancing wave is over. In addition, savings rates are at historic lows and wage growth is stagnant.