According to his website, Simon operates four malls in North Carolina, including one in Smithfield. The others are at or near Charlotte. The internet giant is rapidly expanding its presence in the state.
Amazon is already in the process of establishing a retail outlet at Crabtree Valley Mall in Raleigh, is going to open a new distribution center in Cary and is in the process of completing a warehouse / distribution operation in Duram.
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JCPenney and Sears have gone bankrupt (Sears has since exited Chapter 11) and are closing hundreds of stores. Simon Malls has 63 JCPenney stores and 11 Sears stores, according to its latest public filing.
The deal could make sense for Amazon and Simon as the ecommerce landscape changes and many traditional stores collapse.
Amazon wants more space closer to where customers live as it develops its overnight delivery strategy. Shopping malls are typically located closer to highways and residential areas than gigantic warehouses, which would allow Amazon to speed up delivery times to customers.
Mall owners need cash-rich tenants to replace their bankrupt flagship stores. Although Amazon warehouses don’t attract a lot of traffic, they will help pay the bills.
“It’s a win-win solution for both parties,” said Chris Walton, former executive at Target and now CEO of retail blog Omni Talk. “Simon gets a primary tenant and Amazon gets a more localized fulfillment center. For Amazon, the deal would also give it “a prominent place in the development of shopping mall infrastructure for the future.”
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It is not known how many stores are being considered for Amazon, and it is possible that the two sides could not come to an agreement, the Journal reported, citing people briefed on the matter. Amazon declined to comment on CNN Business. Simon did not respond to a request for comment.
The talks between Amazon and Simon reflect a growing trend in the retail industry of stores and malls to transform into warehouses.
“Underperforming retail locations have become a great location for developers of last mile warehouses,” real estate research firm CBRE said in a report last month. “The disruption of the retail industry and the growth of e-commerce will continue to increase the viability” of these conversions.