Amazon taking over empty J.C. Penney and Sears stores means the end of the mall: former retail CEO
AMZN) distribution centers plopped into vacant J.C. Penney and Sears stores across the country will save the Great American mall, says former long-time Sears Canada CEO Mark Cohen.
“It’s the end of the mall,” Cohen, now a professor at Columbia Business School, says of Amazon’s potential arrival to former mall anchor stores. “For Amazon to open in a J.C. Penney it reflects the need to create geographic connection to the customers and proximity.”
Yahoo Finance’s The First Trade. “Employees at Amazon’s delivery hub are not likely to spend their 15 minutes worth of breaks shopping in the mall. It might be a lifeline in the very short-term for some mall owners. But frankly, I don’t see how it plays into any kind of an upbeat or healthy future for mall shopping.”
In that case, commence the mall death march song.
SPG) — the biggest mall owner in the U.S. — to convert current or former Sears and J.C. Penney stores into monstrous distribution centers, The Wall Street Journal reported this week. Sources have told Yahoo Finance in recent months that Amazon has had teams on the ground at J.C. Penney’s headquarters in Plano, Texas studying some form of deal with the now bankrupt department store.
Amazon and J.C. Penney didn’t return Yahoo Finance’s request for comment. The always colorful CEO of Simon Property Group David Simon was tight-lipped about a deal with Amazon during an earnings call on Monday. But, he didn’t completely rule out a deal.
“Well, I’m really not in any position to respond to market rumors or speculation. So, that’s really with respect to that. I mean, generally, I’d say, the important thing going on that we’re seeing is that more and more retailers are distributing their e-commerce orders from their stores. And so, they’re fulfilling from their stores and they’re also — the curbside pickup or all sorts of fulfillment options are available. That’s a good trend long-term for us. But beyond that, I don’t want to get into logistics or any kind of speculation really around J.C. Penney and/or Amazon, and we should leave it at there,” Simon told analysts.
Amazon and Simon Property Group joining forces makes a great deal of sense in the near-term.
Amazon could get access to prime real estate on the cheap in a bid to speed up last-mile deliveries and reduce shipping costs, as Cohen correctly points out. As for Simon Property Group, it could get an anchor tenant in its malls that it won’t have to worry about paying on time… or going bankrupt.
A problem for Simon, however, is that an Amazon fulfillment center wouldn’t really be a traffic driver to the mall other than employees showing up to go to work. Anchor stores such as J.C. Penney and Macy’s for decades served as the primary traffic driver for malls throughout the country.
So to Cohen’s point, perhaps Amazon will end up crushing the mall.
@BrianSozzi and on LinkedIn.” data-reactid=”42″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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