If you have a missing or wrong Amazon package sent to your home, malls near you can now be your soon-to-be fulfillment centers of the online store. This was after Amazon bought empty mall spaces of the biggest American mall store owner, Simon Property Group. Here's the controversy though. The report said Amazon only paid rip-off prices to buy these spaces amid COVID-19 pandemic.
Amazon takes over empty and losing mall store spaces
On Sunday, Aug. 9, the Wall Street Journal first reported that Amazon has recently bought store spaces from the biggest American mall owner, Simon Property Group.
These stores first accommodated famous shops like Victoria's Secret, Sears, or J.C Penney. Since the pandemic starts, the said spaces continue to close, therefore, not make any profit. This is where Amazon starts to dig in.
The report said that Amazon will be replacing these famous stores to expand its reach to its customers. All store spaces will be redesigned to become Amazon fulfillment centers.
"From Amazon's perspective, most malls are near major population centers which means their fulfillment centers would be on their customers' doorsteps," said Neil Saunders, managing director of consultancy GlobalData Retail. "They can also use locations as places where people can collect and return orders, adding yet more flexibility for shoppers."
Though this decision was not yet confirmed by Amazon, reports speculate that the online store may have purchased the empty store spaces for only rip-off prices.
Saunders revealed via USA Today, that Amazon would not pay 'top-dollar' amounts for the said spaces. This means its possible that Simon's allowed Amazon to pay his spaces for minimum prices since there are no alternative ways to earn money through the empty non-paying stores.
"Some of the alternative uses that were once floated, like gyms, are no longer feasible in the short term. This means that warehouse and fulfillment centers are an increasingly appealing option," Saunders told USA TODAY on Sunday. "However, inviting Amazon in is, in some ways, giving more power to a rival, so there will be a debate about whether this is the right thing to do. The fact Simon is considering it underlines the fact that they are in a difficult position."
Mall stores are now shutting down amid pandemic
Since the beginning of the pandemic lockdown, local stores inside malls are striving to make a living. People are hesitant to go out and buy stuff.
From a business perspective, this is not a good sign. According to CoStar GroupMall, the occupancy rates of standard malls hit their lowest level during the second quarter of 2020 at 94.4%. There were exactly 1,793 store spaces that went closed. 500 from this population "are at risk due to their location being poor" or "due to their dependence" on customer traffic inside stores.
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Written by Jamie Pancho
