Amazon.com, Inc. (NASDAQ:AMZN)’s expansion spree is about to inch a notch higher. Simon Property Group is in talks with the e-commerce giant to turn some department stores left vacant into Amazon fulfillment centers. The conversion will allow the tech giant to operate fulfillment centers close to residential areas to speed up the delivery process.
Simon Property Group is planning to turn over stores formerly owned by JC Penney and Sears Holdings into Amazon distribution centers. According to people with knowledge of the matter, Amazon and Simon have explored the possibility of buying out space occupied by retailers. It has also emerged that Amazon is in talks with multiple mall landlords as it looks to put its grocery store chain into JC Penney locations.
Brick and mortar stores have come under immense pressure in recent months on COVID-19 pandemic, disrupting customers’ shopping patterns. People have opted to shop online in the wake of social distancing policies put in place to curb the spread of the deadly virus.
Simon Properties- Amazon talks
Amazon-Simon negotiations underscore how large mall operators are under immense pressure to fill big-box vacancies left vacant. JC Penney and Sears have already filed for bankruptcy protection living dozens of stores vacant.
The aftermath has been a collapse of major brick and mortar stores, most of which have been forced to close down some outlets on reduced traffic to stores. With the stores left vacant, the nation’s largest mall operator is looking to convert the empty department stores into distribution centers to support the e-commerce phenomenon.
Simon Property owns 63 malls operated by JC Penney and 11 Sears’ stores. While it is still unclear the number of Simon store set to be converted into Amazon distribution centers, there is also a possibility of the two parties failing to reach an agreement.
Simon’s negotiations with Amazon threaten to leave behind a trail of disgruntled retailers. A good number of the retailers are already blaming Amazon for severely disrupting their businesses. The e-commerce giant taking over retail space threatens to ramp up competition in the retail business.