Jeff Bezos’ electronic retail giant, Amazon is reportedly investing in strategically-located US shopping malls to convert them into massive distribution centers.
NBC News reports that a representative of Amazon said the company is exploring new locations and weighing new approaches to growth, and shopping more acquisition is high on the agenda.
Amazon is said to be taking advantage of expected store closures due to Covid-19 to leverage the spaces for the planned fulfillment network expansion.
Covid-19 has reportedly affected a significant number of in-store retail space, particular the once who deal in nonessential products, and malls are expected to challenges due to that.
It is estimated that about 80,000 stores are set to close down between now and 2026, and an additional 50% plus of mall department stores are expected to face similar fates.
This presents Amazon with a strategic opportunity to make these acquisitions, especially as struggling mall operators look to offload mortgage debt.
The company could also use these spaces to extend its push into physical retail in essential areas through chains like Amazon Fresh, diversifying its revenue stream—or as a testing ground for new payment technologies.
It is expected that the mall acquisition boost Amazon’s drive to maintain its competitive positioning as ecommerce grows and rival platforms becomes more competitive due to the pandemic
For instance, in US alone, ecommerce sales accelerated by 33.6% last year to hit $799.18 billion, and electronic retail’s share of overall retail is poised to grow in 2021.
As the largest electronic retailer in the US, Amazon has been a major beneficiary of this growth: The company is responsible for about four in ten 10 US ecommerce dollars and saw sales jump 44% last year.
As ecommerce gains steam, Amazon will continue to look for ways to maintain its positioning and strengthen its hold on the US market, and purchasing malls is one sure way to ensure that.
Meanwhile, the mall acquisition will also help Amazon to combat threats from rivals like Walmart and Target, who are also fast becoming very competitive in the electronic retail space.
Documents which leaked from Walmart recently indicated that the in-store retail giant is working on a massive electronic retail plan specific targeted at take a chunk of Amazon’s market share in that space.
It is widely believed that by expanding its fulfillment network through malls acquisition and other initiatives, Amazon could chip away at the advantage of the in-store retailers and protect its own position.