The biggest mall owner in the U.S., Simon Property Group (NYSE:SPG) is in talks with Amazon (NASDAQ:AMZN) to transform some of its anchor department-store spaces into Amazon fulfillment centers, the Wall Street Journal reports, citing people familiar with the matter.
Department stores have traditionally drawn customers into malls. But with the deterioration of department store traffic, Simon would be gaining a steady new tenant if talks result in an agreement.
For Amazon, it would locate fulfillment centers close to residential areas and help improve delivery speed in the so-called last mile of the process.
The two companies have discussed converting space formerly occupied by Sears Holdings (OTCPK:SHLDQ) and J.C. Penney (OTCPK:JCPNQ) into distribution centers for the e-commerce giant. And in some cases, Amazon and Simon have considered buying out occupied space from the retailers.
The talks illustrate the convergence of two trends that have accelerated since the advent of the COVID-19 pandemic — the decline in department stores and the continued adoption of e-commerce.
According to its latest public filing in May, Simon has 63 Penney stores and 11 Sears locations.
The mall owner is also looking at other options for vacated department stores, and it’s possible the talks could fail to reach an agreement, the people said.
Previously: Landlords brace for wave of retailer bankruptcies.