For years now, foot traffic at large shopping malls has been down drastically. And, obviously the Covid-19 Pandemic has done nothing but exacerbate that situation.
Many retailers have already filed for Chapter 11 Bankruptcy protection, including such giants as J.C. Penney, Sears, Lord and Taylor and Neiman Marcus, while Nordstrom’s has recently closed 16 of their stores.
In an effort to take advantage of the empty mall space, Simon Property Group, the largest mall operator in the US, is in talks with Amazon to lease these empty retail locations as possible Amazon Distribution Hubs and Fulfillment Centers. These discussions are extremely timely due to the continuing trend of declining mall traffic and the explosive growth of e-commerce. Trends that are sure to continue into the future.
Amazon would surely benefit from any deal they are able to negotiate with Simon, or any other mall operators for that matter, as they’ve been seeking additional Distribution and Fulfillment sites near residential areas and these shopping malls are certainly right where Amazon needs them.
The mall operators would surely benefit from the strong finances of Amazon to ensure rents are paid and to help relieve some of the financial pain these mall operators have been experiencing over the past few years; even if they had to accept lower rents per square foot from Amazon compared to their former tenants. Other mall tenants, such as food shops would also benefit from the added work force Amazon would employ there.
Amazon is also considering opening up their new grocery store chain in several formally occupied J.C. Penney locations, continuing their efforts to ensure “that no grass grows under their feet.”
So are these plans logical for both players or not? We certainly think so, but we’d love to hear your thoughts on the subject as well.
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