Amazon to use JC Penney and Sears stores as Fulfillment Centers

Amazon is currently in talks with mall-owner Simon Property Group overusing some closed J.C. Penney and Sears stores as fulfillment centers, according to the Wall Street Journal on Sunday.

“For Amazon, more fulfillment centers near residential areas would speed up the crucial last mile of delivery,” The Wall Street Journal wrote. “For Simon, turning over what was once a prime mall space to fulfillment centers shows it would be willing to relinquish an essential way to bring in more traffic to mall traffic to secure a steady tenant.”

There has been no release of official statements from both parties as Simon Group declined to comment on the reports, while Amazon has a policy of not responding to speculations or rumors for any reason. However, according to past reports and observations, Amazon has always talked about bridging the gap in its “last mile” of delivery. In 2018, Amazon began recruiting new drivers to deliver goods to neighborhoods and communities. The company has also reportedly tested the use of drones to deliver goods.

The J.C. Penney and Sears stores could give Amazon the perfect opportunity to work out its “last mile” delivery plan. By having more fulfillment centers that are closer to customers, Amazon's delivery process would speed up the time it usually takes to deliver a package.

In May, J.C. Penney filed for bankruptcy and also said it was closing its 154 retail stores this summer. Sear announced since November 2019, that it was shutting down 96 of its stores.

Although it is not certain how many stores Amazon intends to occupy Simon malls have 11 Sear stores and 63 J.C. Penney stores, according to Simon’s May filing.

People who briefed the matter said there was a possibility of both parties not reaching an agreement on the matter. For Simon, the deal could mean a deviation from its original business of housing mall stores to become a large department store. While for Amazon the deal will be the perfect opportunity to reach more customers especially those in residential areas and also speed up delivery.

On a general note, malls have struggled for years as more customers prefer to shop online instead. The emergence of the COVD-19 only worsened the situation of malls as stay home orders were instructed in the country. Even with the easing of the stay home orders and as the economy gradually reopens, many people still prefer to shop online as a more effective way of contactless shopping.