Department stores have been the backbone of shopping malls that can't rely on concessionaire rentals and customer traffic alone.
But as the virus pandemic hurts businesses internationally - and as online shopping continues to divert sales from bricks-and-mortar shops - department stores could get much-needed help from an unexpected company.
Amazon.com, Inc. and mall proprietor Simon Property Group, Inc. are discussing a partnership to turn some of SPG's department-store spaces into warehouses, according to sources.
The number of spaces that could be converted into Amazon "fulfillment centers" has yet to be determined but the retail company is said to be interested in vacant J. C. Penney Co., Inc. shops or acquiring stores still in operation. Amazon is looking into Sears, Roebuck and Co. spaces, too.
Amazon has been in talks with SPG in the past few weeks and, in fact, the idea of converting empty mall spaces into distribution centers was tackled before the coronavirus, sources said. They added deals for mall-space conversion may not materialize.
Amazon doesn't disclose information or issue statements on speculation, a company representative told Reuters. SPG also declined comment as did Sears and JCPenney.
A number of malls in the U.S. are already renting parking spaces to Amazon's delivery trucks. For SPG - the largest owner of malls in the country - leasing retail properties to Amazon would be a surprise, according to The Wall Street Journal.
The agreement could be advantageous to the Seattle-based American multinational technology group. If everything goes according to plan Amazon could open up strategically sited distribution spaces across the country - allowing it to cut delivery times.
Amazon posted a twofold increase in net profit of $5.2 billion in the second quarter this year while some of its rivals are being hammered by the health crisis.
