Grocery stores can be the next big thing to go to the mall

Shoppers walk through the King of Prussia, Pennsylvania.

Jenna Moon | Bloomberg Getty Images

As consumer shopping habits change, shopping malls in America anoint many servants: food halls, movie theaters, gyms. Grocery stores may be ahead of the list.

Simon Property Group, the owner of the largest mall in the US, thought about the earnings on Monday evening. The comment comes on the heels of a report stating that Amazon was negotiating with Simon to open warehouses at some of its closed Cyrus and Jesse Penney locations. CEO David Simon did not comment on the report on Monday. Amazon previously declined to comment.

One analyst believes that instead of opening a logistics hub at Simon Mall, Amazon could look to open its own grocery stores there – which might work better for both parties.

“We understand that Amazon is seeking grocery deals in the Boston market, and grocery offerings in A-rated malls similar to Europe and Asia will, in our opinion, boost essential retail usage and shopper traffic,” Compass Pointe Real Estate In a note to clients, analyst Floris van Dijkam said. He said that it is much more common in the U.S. for malls to anchor than grocery for grocery stores.

A major hurdle with opening an industrial space such as an Amazon logistics hub within a shopping mall is that it is needed.

But, van Dejkum said, a grocery store is considered a retail use and so it can be “very handy” for an old department store. A grocery store in a mall can also attract more customers and benefit more nearby retailers and restaurants than a warehouse, he said.

Amazon, which owns the Whole Foods Market and the cashierless Amazon Go convenience store, is set to open the first store of a new grocery business this year and expand the concept from there.

When asked specifically about opening a grocery store at Simon Property Mall, CEO Simon said: “Yes, I hope we can definitely do more business with that category.”

The executive also cited the fact that more retailers are using their stores as mini-distribution centers to create more sales shifts online – a trend that only intensified during the coronavirus epidemic.

“The important thing is that we are seeing more and more retailers distributing their e-commerce orders from their stores … This is a good trend for us.”

Shares of Simon Property were up nearly 7% on Tuesday morning, falling nearly 53% this year. The company has a market cap of $ 21.3 billion.

The mall operator is trying to differentiate itself from its rivals so that something new can be done in the space and it is expected that the turmoil in the industry will eventually strengthen. US retailers have already announced the closure of 6,630 permanent stores this year, according to a tracking report by Corsite Research. More than 40 retailers have filed for bankruptcy in 2020, and this could go even further, with the epidemic having many who were already on the verge of sidelines.

“Do we have too many malls? Sure,” CEO Simon said of the state of the industry. “But” the malls that survive will benefit from that contraction. ”

The shakeup is leaving landlords just as Simon is searching for new tenants to visit his mall and attract shoppers. However, the challenge is that many retail businesses are still not growing, which is why new types of tenants are being discussed.

“There are all kinds of ideas going on about the mall and how it can serve the community,” he said.