Amazon can replace closed department stores at wrecked malls.
The company is in talks with Simon Property Group, the largest shopping center in the United States, to convert earlier than current JCPenney and Sears stores into distribution centers to deliver packages, the Wall Street Journal reported Sunday.
According to her website, Simon operates four malls in North Carolina, including one in Smithfield. The others are in or near Charlotte. The internet giant is rapidly expanding its footprint in the state.
Amazon is already in the process of setting up a retail store in Crabtree Valley Mall in Raleigh, will open a new distribution hub in Cary and is in the process of completing a high-end warehouse / distribution operation in Duram.
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Both JCPenney and Sears have filed for bankruptcy (Sears has since dropped out of Chapter 11) and closed hundreds of stores. Simon malls have 63 JCPenney and 11 Sears stores, according to its most recent public preservation.
The deal could make sense for both Amazon and Simon, as the e-commerce landscape has shifted and many traditional brick-and-mortar stores are collaborating.
Amazon wants more space closer to where customers live because it builds its one-day delivery strategy. Shopping malls are typically located closer to highways and residential neighborhoods than mammoth department stores, which would allow Amazon to speed up shipping times to customers.
Retailers need cash-rich renters to replace their bankrupt anchor stores. While Amazon warehouses will not attract a lot of foot traffic, they will help pay the bills.
“It’s a win-win for both sides,” said Chris Walton, a former Target executive and now CEO of retail blog Omni Talk. “Simon gets an anchor rental company and Amazon gets a more localized tracking center. For Amazon, the deal would also “give it a front-seat seat in developing the retail infrastructure for the future.”
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It is not clear how many stores are being considered for Amazon, and it is possible that both sides may not be able to reach an agreement, the Journal reported, referring people who have been informed of the matter. Amazon declined to comment to CNN Business. Simon did not respond to a request for comment.
The conversations between Amazon and Simon reflect a growing trend in the retail business of stores and stores in department stores.
“Underperforming retail sites have become an ideal location for last-mile real-time developers,” real estate real estate company CBRE said in a report last month. “The constraints of the retail sector and the growth of e-commerce will continue the viability” of these conversations.
