GGP CEO: Amazon’s Planning Hundreds Of Physical Bookstores
On this week’s earnings call, General Growth Properties CEO Sandeep Mathrani took a question about today’s foot traffic in GGP’s numerous malls located nationwide. In the answer was a piece of news the retail property world only might have anticipated: Amazon.com is planning on a radical expansion of its brick-and-mortar efforts. Currently, Amazon operates only one shop in Seattle, but Mathrani suggests the number is about to explode.
“You go to Amazon opening brick-and-mortar book stores, and their goal is to open, as I understand, 300 to 400 bookstores,” the CEO said. “It’s a very interesting evolution, because the cost of the last mile is that important,” Mathrani said to investors. “The mall business, if you appreciate that it’s more focused on fashion, is very different than a staple business where you’re buying commodity. In the mall business, the impact of eCommerce is a lot less—it’s actually your friend, not your enemy.”
While this statement doesn’t qualify as any more than a rumor — Amazon declined comment to the original reporters at Ars Technica — there is a logic to such a move.
As shipping prices rise — it makes sense that ship-to-store options will be increasingly demanded by online retail customers, which could be the come-on that puts numbers of e-tailing customers back into their cars to come to the shopping center. In December, UPS and US Postal Service raised rates approximately 5% and 9.5% respectively, which, when matched with steeply rising volumes of parcels, ensures that the bite from shipping costs will loom large on Amazon’s bottom line going forward.
It’s worth noticing that the retailing operations formula that supports ship-to-store appears to apply an upward pressure on square footage demand at lease time, because such stores will have to carry out a mini-warehouse role in addition to traditional customer-facing retail. These hybrid footprints will be necessary to keep up with the demands of customers who want what they want when, where and how they want it.