Will Grocery Stores Move Into Malls?

The largest U.S. mall owner is open about wanting to work with supermarkets to fill unused space.

August 12, 2020

INDIANAPOLIS—Over the years, American shopping malls have embraced various trends in an attempt to stay relevant, such as adding movie theatres, food halls and gyms. Now the largest owner of U.S. malls is considering bringing in grocery stores to its store selection, CNBC reports. CEO David Simon with Simon Property Group said he is “hopeful that we can certainly do more business with that category.”

Simon Property’s hint comes after Amazon reportedly was in talks with the company to open warehouses in closed Sears and J.C. Penney locations. “We understand that Amazon is reportedly looking for grocery deals in the Boston market, and grocery offerings at A-rated malls, similar to Europe and Asia, would provide essential retail use and boost shopper traffic, in our opinion,” said Floris van Dijkum, real estate analyst with Compass Point. He pointed out that overseas malls often have supermarkets as anchors.

Although rezoning issues would need to be dealt with to open an industrial space such as one Amazon would require, van Dijkum said a grocery store wouldn’t have that hurdle and would likely draw in more customers to the mall. Meanwhile, Simon said more retailers have been repurposing their mall locations as mini-distribution centers as sales shifted more online before and during the pandemic.

“The important thing going on that we’re seeing is that more and more retailers are distributing their e-commerce orders from their stores,” Simon said. “That’s a good trend long-term for us.”

Simon Property has been actively working to reinvent its mall space in the wake of store closures. “Do we have too many malls? Sure,” Simon said. “But ... the malls that ultimately survive will benefit from that contraction. … There’s all sorts of ideas floating around about what the mall can do and how it can service the community.”