Simon Property Group is in talks to convert empty Sears and J.C. Penney stores in malles into distribution centers, reports say.
The Wall Street Journal report on talks between Amazon and the nation’s largest mall operator Simon Property Group to convert empty department stores including J.C. Penney and Sears into distribution centers.
WSJ citing people familiar with the matter reported discussions began before the coronavirus pandemic led to temporary store closures.
The business model of a mall, which is about pulling many people in and getting them to stay for as long as possible, has just collapsed, Neil Saunders, managing director of consultancy GlobalData Retail told USA TODAY, “it will be particularly hard to find new tenants for the large spaces once occupied by department stores,” he added
With venues like theaters still shut down due to coronavirus, and small retailers closing or ask for rent relief, 1 in 2-4 malls may go out of business, according to analysts.
The fact that Simon is considering the option of inviting their rival, Amazon, in their malls means they are in a difficult position.
Since May, many retailers have filed for Chapter 11:
On May 4, 2020, J. Crew. announced that it would apply for bankruptcy protection amidst the COVID-19 pandemic.
On May 7, 2020, Neiman Marcus filed for bankruptcy due to high debts.
On May 15, 2020, JCPenney announced it had filed for Chapter 11 bankruptcy protection.
On May 27, 2020, Tuesday Morning announced that it files for Chapter 11 bankruptcy protection and close approximately 230 of its nearly 700 stores due to coronavirus pandemic.
In June 2020, The world’s largest retailer of diamond jewelry, and the parent company of Zales, Jared and Kay is closing 380 stores, due to the coronavirus pandemic.
In June 2020, GNC filed for Chapter 11 bankruptcy protection and indicated plans to close at least 800 stores. Effective on June 30, 2020, the stock was delisted from the New York Stock Exchange. GNC will also close 29 Canadian stores.
In July 2020, Lucky Brand filed for bankruptcy. Authentic Brands Group and Simon Property Group looked into buying the brand.
In July 2020, kitchenware products company Sur La Table filed for bankruptcy.
On July 8, 2020, Brooks Brothers filed for Chapter 11 bankruptcy protection and will close 51 of its 250 locations in North America.
on July 13, 2020, RTW Retailwinds, the parent company of New York & Company, filed for Chapter 11 Bankruptcy due to the coronavirus. They announced that they may close all locations.
On July 23, 2020, Ascena Retail Group, the parent company of Ann Taylor, Justice, and Lane Bryant filed for Chapter 11 bankruptcy.
On August 2, 2020, Lord & Taylor filed for Chapter 11 bankruptcy protection
On August 2, 2020, Tailored Brands filed for bankruptcy due to the coronavirus pandemic. They would close around 500 locations.
L Brands, the parent company of including Victoria’s Secret, Nordstrom, and Signet Jewelers, announced nearly 25 percent reduction of all retail locations following the COVID-19 pandemic. The closure of 250 Victoria’s Secret and Pink stores.
Analysts project that about 25% of America’s malls will disappear within the next three to five years.
According to CoStar Group, which tracks real estate, mall occupancy rates hit their lowest level at 94.4%, during the second quarter of 2020
Out of U.S’s 1,793 enclosed shopping malls, nearly 500 “are at risk due to their location being poor” or “due to their dependence” on office workers or tourism for foot traffic, according to CoStar senior consultant Kevin Cody.
Amazon may do a good deal as most malls are in the best locations close to population centers and close to their customers’ doorsteps. People also can collect and return orders, adding flexibility for customers.