Malls used to be the hippest spot to shop, meet your friends for a greasy bite and do some people watching. Pre-internet, they were the only place you could find sexy lingerie, drippin’ sneakers, sports equipment, jewelry, cheap makeup, new movies, get exposure to creepy strangers and find friendly social contact all together.
Of course, the internet killed all that. Social media replaced teenagers’ need for legit social interaction; and online shopping — particularly the rise of Amazon — yanked the rug out from underneath the cultural phenomena that was “the mall.” No one had a reason to shop in-person anymore; it was time consuming, it was usually more expensive and you had to get dressed to do it.
Slowly, malls began to fall into disuse. Businesses within them began closing, and then malls themselves started to close. It was the end of a chapter, it seemed, and the beginning of the e-commerce era.
And now, Jeff Bezos, the founder and CEO of Amazon, the emperor of ecommerce, and the richest man on Earth, might be stepping up to acquire America’s dead and dying malls — to resurrect the shuttered institutions he smothered, in his own image.
To turn the ruins of large department stores into Amazon fulfillment centers. Which has caused a hopeful stir in the market for mall-space for the first time in years.
On Sunday the Wall Street Journal reported that Amazon was in discussions with the largest mall owner in the US, Simon Property Group Inc., to discuss the acquisitions. Both Sears and JC Penney filed for bankruptcy protection in 2018, and have been continually looking for ways to close their stores that were underperforming. Things were not looking good for them. Mall operators like Simon were becoming concerned about how they might fill such large spaces, if those department stores shut down entirely.
“In this environment, it will be difficult to fill boxes of that size in the short-term,” said Joseph Malfitano, founder Malfitano Partners, a turnaround and restructuring firm. “A deal with Amazon provides a quick fix as these locations would likely need to be subdivided, which would take time and money.”
In other words, department stores like JC Penney and Sears were about to leave some big gaping holes in their malls — which, Amazon might be willing to fill.
The announcement that Amazon and Simon Property Group were discussing the business deal, got people the market excited. Simon’s stock jumped over +10% in trading by the end of Monday. Which was certainly good news for the real estate company, which has tanked by –54% in market value since February of this year when COVID-19 shut down all non-essential businesses. (Notably, over that same period of time, Amazon’s stock has soared by +61%.)
Things were looking somewhat dire for Simon Property Group, as their department stores began closing certain locations, pulling out of their leases and leaving empty space in their place.
Then, along came Jeff Bezos.
And, even though switching from a commercial location (like Sears) to an industrial one (like an Amazon fulfillment center) could cause some zoning challenges; even though fulfillment centers would bring in less rent per square foot, it would still save Simon Property Group money. It would cover some of the loss that would otherwise be a totally sunk cost.
Whether or not this deal goes through, remains to be seen. Amazon has strict rules against commenting on speculation or hearsay, and Simon Property Group has declined to say anything about the deal. But it seems like it would be a win-win situation for both companies.
It’s Bezos’ latest step towards building his Amazon World. His company has come down out of the cloud, it’s taking up residence in warehouses and now potentially, inside America’s malls. He’s expanding evermore, ever outward, getting bigger and amassing more wealth, and we continue to feed that megalomaniacal machine endlessly, buying in torrents from Amazon.
Because it’s easy. It’s way more convenient, it’s fast and just generally less of a hassle than actually going out to buy stuff.