PortandTerminal.com, August 9, 2020
NEW YORK – The Wall Street Journal is reporting today that eCommerce giant Amazon and Simon Property Group are in discussions that would see them converting major anchor tenants like Sears and J.C. Penney into fulfillment centers.
For Amazon, more fulfillment centers near residential areas would speed up the crucial last mile of delivery. For Simon, the largest mall operator in the United States, turning over what was once prime mall space to fulfillment centers shows it would be willing to relinquish an essential way to bring in more mall traffic to secure a steady tenant.
The discussions started before the coronavirus pandemic, with the two companies exploring the idea of buying out occupied space from the retailers in some cases.
The talks illustrate the convergence of two trends that have accelerated since the advent of the COVID-19 pandemic — the decline in department stores and the continued adoption of e-commerce.
It wasn’t clear how many stores are under consideration for Amazon, and it is possible that the two sides could fail to reach an agreement, people briefed on the matter said. Simon malls have 63 Penney and 11 Sears stores, according to its most recent public filing in May.
Turning over anchor store spaces in prime locations to Amazon would represent a major shift in the mall business. If Simon rents the space as fulfillment centers, it would probably accept a considerable discount to what it could charge another retailer, Dow Jones said. The choice also won’t please nearby tenants: fulfillment centers draw less foot traffic to the mall, and it would help make Amazon, seen as a disruptor of retail businesses, even more competitive.
Click here to read the Wall Street Journal’s full exclusive report (paywall).
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