Amazon May Turn Dying Department Stores into its Own Fulfillment Centers

Amazon may be about to have an expanded presence in the place you’d least expect it to: malls. Yet the online retail giant isn’t about to open stores in the archaic shopping institutions. Instead, it’s looking to turn some dying department store spaces into fulfillment centers, according to a new report from the Wall Street Journal.

Many malls have been hovering near death’s door for years now thanks to the surge in online shopping. The economic fallout from the COVID-19 pandemic has only accelerated that decline. Earlier this year, J.C. Penney and Sears both filed for chapter 11 bankruptcy protection due to lockdowns and falls in foot traffic. Those bankruptcies are another big problem for mall owners as the department stores are (or were) large foot traffic drivers–not to mention tenants who paid big bucks for the retail space.

But now with many J.C. Penney and Sears stores likely to close, mall owners are in desperate need to find new tenants. That’s where Amazon comes in. The company is talking to Simon Property Group, a large mall owner, about turning some of its J.C. Penney and Sears stores into Amazon fulfillment centers. These department stores are already located in prime areas near major roadways and suburbs, which could help Amazon greatly speed up “last mile” deliveries to its customers.

Of course, while Amazon and its customers may be the big winners in such a deal, mall owners would come in a distant second. Department stores may be prime retail space, but if converted into warehousing space, the rents would be less. And of course, other retailers in the mall would primarily only be losers. After all, converting a department store into a warehouse would mean malls would lose a big anchor store, which could see more declines in overall foot traffic at the mall.

On the plus side, at least those Amazon fulfillment workers could help keep mall food courts populated during lunchtime.