Amazon.com Inc. has initiated talks with the largest mall owner in the United States to transform some of its shuttered anchor department store spaces into fulfillment centers for the online retailer.
The Wall Street Journal reported Sunday that the arrangement would not only “speed up the crucial last mile of delivery” for Amazon by establishing more fulfillment centers near residential areas but also allow Simon Property Group Inc. to sign permanent tenants to prime real estate.
According to the Journal, the talks constitute an unconventional approach to two problems plaguing the beleaguered retail sector long before the novel coronavirus pandemic squashed foot traffic nationwide: the decline of malls and the meteoric rise of online commerce.
To date, the talks have centered on the potential conversion of stores formerly occupied by J.C. Penney Co. Inc. and Sears Holding Corp. into Amazon distribution centers. The additional space, closer to customers, “where delivery drivers could come unload and pick up packages” could ultimately boost delivery efficiency, CNBC reported.
J.C. Penney filed for bankruptcy in May, with an eye on a fall sale, before announcing the closure of 154 locations this summer. Meanwhile, Sears announced plans in November to shutter a total of 96 stores nationwide, the network reported.
Citing the most recent public filing in May, Fox Business reported that Simon malls counted 63 J.C. Penney locations and 11 Sears stores among its properties.
It remains unclear how many stores inside Simon’s 204 malls nationwide are being considered for conversions. The mall owner is, however, putting in a joint bid with Brookfield Property Group for J.C. Penney Co. If successful, taking over the department store chain would give Simon and its partner control over the store space as well as the power to alter logistical aspects such as parking structures, exits and access to shared spaces and roads, the Journal reported.