Amazon may turn dying JC Penney and Sears stores into warehouses

The department stores that anchor shopping malls have struggled to survive in the face of online shopping, but those spaces might find a new lease on life through their greatest foe. Wall Street Journal sources claim Amazon is in talks with mall owner Simon Property Group to convert some of its department store spaces into fulfillment centers. It’s not certain how many stores would become warehouses, but Amazon is reportedly looking at either stepping into empty JC Penney and Sears stores or else buying locations that are still in use.

Amazon is also said to be talking to multiple mall owners about putting its future low-cost grocery stores in former JC Penney spaces, although those won’t necessarily come to Simon-owned malls. The talks about fulfillment centers have been going on for “months” and predate the COVID-19 pandemic, the sources said.

We’ve asked Amazon for comment.

There’s no guarantee the two sides reach a deal, provided the report is accurate. However, it would make sense given the state of US shopping malls. Even before the pandemic, malls and their department stores were grappling with reduced traffic as customers increasingly shopped online. Some malls have replaced stores with call centers and other non-retail businesses just to stay afloat. COVID-19 further limited those options. It’s hard to rent space to offices that are working from home, and retail is frequently limited to curbside pickup or just a tiny amount of in-store shopping.

Amazon’s presence would likely make smaller mall store owners bristle, but they might not have much choice. The internet giant could provide a regular source of rent and keep malls alive. There would certainly be plenty of irony — the very force destroying malls might represent the best chance at keeping them intact.