Amazon Wants to Turn Dying Department Stores Into Fulfillment Centers
Yes, the irony here is real
Amazon was already a massive company prior to the start of the COVID-19 pandemic. Now, with more people ordering things online than ever before, it continues to grow. Due to that uptick in demand, Amazon needs more space for fulfillment centers.
In a truly ironic turn of events, the e-commerce giant is reportedly eyeing vacated department stores like JCPenney, Sears, and Nieman Marcus as prime real estate for expansion. If Amazon does start taking over these locations it would cement a major shift in the retail industry and give the Bezos-led company an even larger logistics network.
Always Wanting More
Due to the rise of online shopping, department stores that typically serve as anchor clients for malls are struggling. It doesn’t seem like there will be a path to recovery for those stores. That was true even before the COVID-19 pandemic hit and is even more valid now.
According to The Wall Street Journal, Amazon is in talks with the Simon Property Group, the owner of a ton of mall real estate, to convert some of the failing department stores into fulfillment centers. At this point in time, it’s unclear how many stores would be converted. However, Amazon seems to be seriously eyeing both Sears and JCPenney locations that have been vacated already or will soon be.
Aside from adding more fulfillment centers to its network, Amazon has an interest in the department stores for another reason — its grocery business. The Big Tech firm is making a ferocious push into the grocery sector, both from its online storefront and in the real world.
Amazon could potentially utilize the large spaces left behind by the likes of Sears and JCPenney to open more grocery stores. It would likely outfit such locations with its cashierless tech in the form of camera networks and smart shopping carts.
The talks between Amazon and the Simon Property Group have reportedly been going on for “months.” It’s worth noting that they were even taking place prior to the start of the pandemic. Economic hardships surrounding COVID-19 simply make the deal look that much sweeter from Amazon’s perspective.
Will it Happen?
Of course, everyone should take reports of “talks” with a grain of salt. There is no guarantee that Amazon and Simon will reach a deal.
However, it does make a lot of sense for both sides. For Amazon, the potential of expanding its fulfillment center footprint could lead to things like even faster shipping and more pickup options for local consumers. It could also be a key enabler for the e-commerce giant to make significant headway into the grocery store business.
The thought of Amazon creating a presence in malls across the country might make smaller stores livid. However, Amazon could do something for malls that no one else seemingly has the ability to do right now — pay rent. Leasing space for fulfillment centers and grocery stores could provide a regular and reliable source of income for malls that may otherwise face closure.
Yes, there is plenty of irony in this situation. Amazon, the biggest threat to physical shopping, might just be the thing that saves it. We’ve seen stranger things happen in 2020.
Originally published at https://www.theburnin.com on August 10, 2020.
