Buyers walk through the King of Prussia Mall in King of Prussia, Pennsylvania.
Jennah Moon | Bloomberg | Getty Images
As shoppers’ habits for consumers change, America’s shopping center has salvaged many saviors: eateries, cinemas, gyms. Grocery stores could be next on the list.
Simon Property Group, the largest owner of shopping mall in the US, responded to the idea in a call Monday night. The comments came on the heels of a report that said Amazon was in talks with Simon to open warehouses at some of its closed Sears and JC Penney locations. CEO David Simon did not comment on the report on Monday. Amazon also declined to comment earlier.
One analyst thinks that instead of opening logistics hubs at Simon Mall, Amazon might be looking to open more of its own grocery stores there – which could work out better for both parties.
“We understand that Amazon is expected to be looking for groceries in the Boston market, and supply of groceries at A-rated shopping centers, similar to Europe and Asia, would provide essential retail use and stimulate customer traffic, in our opinion. , “Compass Point real estate analyst Floris van Dijkum said in a note to clients. It is much more common abroad than in the U.S. for shopping malls to have groceries as anchors, he said.
One huge obstacle with opening an industrial space, such as an Amazon logistics hub, within a shopping mall is that rezoning that should be mandatory.
But, said van Dijkum, a grocery store is considered a retail use and so it can be a “much easier” fill for an old department store. A supermarket in a shopping mall could also attract more customers and the surrounding retailers and restaurants benefit more than a warehouse, he said.
Amazon, which owns Whole Foods Market and cash-free convenience stores Amazon Go, is set to open the first store of a new grocery store this year and expand the concept from there.
When Simon was specifically asked about opening stores in Simon Property Mall, CEO Simon said, “Yes, I hope we can certainly do more business with that category.”
The executive also cited the fact that more retailers are using their stores as mini-distribution centers as more sales shift online – a trend that only accelerated during the coronavirus pandemic.
“The important thing we are seeing is that more and more retailers are spreading their e-commerce orders from their stores. … That is a good long-term trend for us.”
Simon shares were up nearly 7% on Tuesday morning, after falling about 53% this year. The company’s market capitalization is $ 21.3 billion.
The mall operator sets itself apart from its competitors by trying to innovate in the space and expects that the unrest in the sector will eventually make it stronger. U.S. retailers have already announced 6,630 permanent store closures this year, according to a tracking from Coresight Research. More than 40 retailers filed for bankruptcy in 2020, and this could continue to grow, with the pandemic affecting many already sitting on the brink of bankruptcy.
“Do we have too many malls? Sure,” said CEO Simon about the state of the sector. “But … the malls that will eventually survive will benefit from that contraction.”
The shakeup left landlords like Simon looking for new tenants to move into their shopping center and sign buyers. The challenge, however, is that not many retail businesses are still growing, which is why new types of tenants are being discussed.
“There are all sorts of ideas flying about what the mall can do and how it can serve the community,” he said.
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