How Amazon Could Turn Dying Malls Into a Growth Engine
Updated: Mar 9, 2021
What happened
Amazon is in talks with Simon Property Group (SPG), the biggest mall owner in the US, to convert current or former Sears and J.C. Penney stores into Amazon’s last-mile fulfillment centers.
SPG operates 63 Penney and 11 Sears stores. Both retailers have previously filed for bankruptcy protection. If sites remain unoccupied, missed rent aside, co-tenancy provisions will allow other tenants to renegotiate their deals.
In the current market conjuncture, few companies have the means to occupy the large sites, which, if abandoned, would have adverse effect on the malls as well as surrounding communities. With over 15,000 mall units across the US expected to shut in 2020 alone, the solution, should it work, may be, quite literally, a lifesaver. No pressure!
Obvious consequences
As converting large parts of the local malls into industrial hubs would probably lead to an avalanche of animosity from the local communities across the US, it would be practical to make the fulfillment centres partially consumer-facing, expanding Amazon’s omnichannel offering.
Counter and curbside pick-up
Would save time and money to non-Prime consumers as well as Amazon itself (no delivery costs), and allow almost instant fulfillment if the product is available on site.
Return drop off
Considering close proximity to communities, may be easier than re-boxing & dealing with couriers. Would also offer instant refund and, again, save Amazon delivery costs.
In view of the recent grilling at the US Congress, which focused on Amazon’s dealings with small and medium enterprises — just a teaser of things to come — it would be wise for the company to preemptively demonstrate its support of small businesses.
Promote top products by local sellers
This could be digital, could be physical — with product demonstrations where possible.
Offer turnkey promotional environments for sellers
Free, bookable, open and fitted with the relevant tools, the spaces would allow local entrepreneurs to demonstrate and promote their products — on site and/or through social streaming. Would help small sellers without marketing budgets, as well as Amazon — accused of not supporting sellers unless they spend big on the platform’s promotional services.
Next level idea
The year-long congressional investigation uncovered numerous cases of problematic behaviour — from appalling service, seller bullying and IP theft to offering Amazon-own competing products below cost and simply kicking sellers out without explanation.
The idea: Amazon could offer support touch-points for local sellers, helping them set up and grow on the platform.
A permanent representative at an appropriately set up touch-point would offer free, bookable consultations, helping local entrepreneurs:
Become Amazon sellers
Grow their Amazon businesses
Address basic troubleshooting, fast-tracking urgent cases through off-site support
Register a complaint, receive proper feedback (currently, clearly, an issue)
Benefits:
Preempt congressional recommendations
Increase number of sellers on the platform — good for business
Counteract problematic PR that surrounds the investigation by helping Americans start businesses in times of record unemployment
Build goodwill towards Amazon within local communities
In 2020, US consumers are expected to spend ca. $710 billion on ecommerce, (up 18% year-on-year.) At the same time, brick-and-mortar retail spending will go down 14% to ca. $4.2 trillion.
According to JLL, by 2025, ecommerce alone will require an additional 1 billion square feet of warehousing space, to move $1.5 trillion worth of goods.
By 2030, CBRE predicts the top 10 global ecommerce markets combined to account for 43% of total retail sales. Predictions in times of extreme uncertainty are contests of imagination, but whatever the exact figures, the overarching trend is pretty clear. Whether with this SPG-Amazon deal or shortly after, we need a scalable solution that would work for the retailers, the consumers as well as wider communities in between.