Amazon Is Gobbling Up Failed Malls [video] | Hacker News Reader

Amazon Is Gobbling Up Failed Malls [video]

wsj.com

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The WSJ video doesn't get into it, but the fall of US Malls has more to do with changing tax code [1] than with Amazon (though that's still a part). They were on the way out before Amazon + eCommerce got big.

FWIW - I'm actually from that region of Ohio and think this is a positive step. There's a lot of other factors that go into this of course (shifting demographics, overall population drain), but on the whole, this seems positive.

1 https://www.smithsonianmag.com/arts-culture/death-and-rebirt...

I've spoken to a number of retail execs and mail owners about this (the latter, like all real estate investors, are tax experts), and they definitely think it's mostly about e-commerce

Malls are failing largely because anchor tenants are dying.

Sears, JCPenny, and Macy's all had horrible management over the past decade. And the department stores have faced huge competition for decades, whether it's Walmart offering cheaper goods or stores like H&M or Sephora that specialize in a specific category. My experience of department stores have been of unorganized, more expensive stores with a confusing, mediocre selection; why would I want to shop there?

On top of all that, America is over-retailed compared to other developed countries: https://amp.businessinsider.com/images/5bb37815ac0a631473519...

Yes as one RE exec likes to say, American retail is under-demolished

Good. As far as I'm concerned, all malls should (and will) die.

They are a scourge. Some hold nostalgic feeling for them because they were the only thing close to a social hub at the time (whereas malls are one of the reasons social hubs aren't there in the first place).

Go malls, go. I ain't shedding tears for thee.

After all, I'm in good company. The guy who invented the malls hates them too[1].

[1]https://qz.com/454214/the-father-of-the-american-shopping-ma...

Sadly this came too late for Detroit's Northland, the first shopping mall in the country. Because it was built first they guessed at how a mall should look. They thought it would be important to resupply stores without getting in the way. So they built this huge basement that allowed dozens of semis to pull up to loading docks below the stores.

The basement was huge and had Amazon not wanted to use it to unload trucks they could have had a second warehouse as large as the one above. I remember thinking at the time this would make an incredible supply depot but Amazon didn't immediately come to mind.

The mall was torn down and in a twist of fate the land was offered to Amazon as a possible property for their HQ2 headquarters. My guess is it will end up as an apartment complex.

https://en.wikipedia.org/wiki/Northland_Center

> the first shopping mall in the country

Northgate Mall in Seattle would dispute that: https://en.wikipedia.org/wiki/Northgate_Mall_(Seattle) . Northgate itself is older than Northland, but the claim "Northgate was the first regional shopping center in the United States to be described as a mall" is "[citation needed]"

It’s also not going to be around much longer in its current form.

Great business logic for centralizing and automating retail distribution centers around existing infrastructure and transportation. The issue is only a small number of huge malls will be converted and competing small business shop fronts are being rendered non viable which is creating significant economic repercussions

> The issue is only a small number of huge malls will be converted and competing small business shop fronts are being rendered non viable which is creating significant economic repercussions

How is turning malls into warehouses affecting small stores?

centralizing delivery. It's no longer cost effective to go to a store, look for a product, pay for it and return home when it is cheaper to have it delivered at a specific time and day in both time and money. Small specialized businesses can't compete with this to charge the margin they need for rent and overheads. This is putting lot of shops out of business, redundancies etc

Why should we care if they go out of business? If they shutdown and bow out won’t newer, useful businesses pop up in their place? I see no reason to treat a small shop like an endangered species that must be preserved. Preserved for what? Most people won’t go there anymore.

Example: There was a fairly large Mom and a Pop retail store here that shutdown once Walmart moved in. What opened in its place? A massive rock climbing facility with 40 foot walls. It has enriched the community and given people something to do other than just roaming aisles looking for crap to buy and not talk to each other.

The general sentiment is that small businesses are owned and operated by our neighbors. Part of a healthy society is having a group of people with diverse backgrounds, interests, and jobs all living together.

Amazon's march towards a global monopoly is partially responsible for homogenizing our society.

The essential economic problem is that currently running small retail businesses isn't viable unless you sell through Amazon's distribution (also less centralized ebay). This means far fewer retail jobs, empty storefronts and malls, taxes levied on businesses, gasoline/petrol etc The centralizing of everything through Amazon is classic monopoly practice. I have a ladder being delivered by them today I ordered on Friday evening. No one can compete on price or efficiencies both on their side and from my perspective. I don't want to drive my truck to buy a ladder. Nothing is stopping this trend form rapidly increasing across the western world

It is interesting, because a extremely large percentage of these small businesses that are failing are immigrant minority owned.[1] So in many ways keeping small businesses around does make things 'diverse' but it also leads to a much bigger problem. This massive amount of immigration that was meant to help keep the economy running is now failing to keep their businesses going, and falling into high rates of unemployment or underemployment. Does it really serve our economy to have a bunch of immigrants whose main mode of economic activity is starting small businesses that are not very viable, and hiring all their relatives?

[1] https://www.nytimes.com/2012/07/01/opinion/sunday/immigrants...

The Collin Creek mall in Plano, TX has been its way out for a decade, only anchor left is Sears. Most of the internal stores were replaced with Asian massage parlors, not sure that is the useful new businesses you had in mind. Oh yeah, enough seniors power-walking their laps around the interior to power the matrix twice over.

But I don’t blame Amazon, a lot of the department stores have been poorly managed for decades, and they are so bad off now that nobody with a fresh perspective wants to touch them. I think Sears blew it all on canceling their credit cards for inactivity every thirty days then issuing new ones next time you went into the store ;)

Collin Creek is utterly bizarre to walk through. it seemed like 80% of the shops were shuttered, and I saw maybe a dozen other customers while walking the length of the mall. One of the 15,000+ sqft units was leased out to a model railroad club that used the space for one evening a week.

I don't know how they're even making enough to keep the lights on.

The problem isn't that you want to preserve an inefficient business model. A company with a monopoly like the one Amazon has, can afford to take small businesses out of the market by operating at a loss. Once the small businesses are out of the market, they can increase prices possibly above the original price level the small businesses used to offer. Without competition, smaller incumbents won't succeed. Monopolies stifle innovation. New incumbents won't have a chance.

>> If they shutdown and bow out won’t newer, useful businesses pop up in their place?

No. We have Kmart's our town that have been empty for nearly 15 years. With the way commercial properties are taxed, the ownesr just let them sit vacant

Kmart is a small mom+pop store now?

In this specific example it doesn't matter if it's Kmart or a one off mom and pop store. You can look at NYC to see how empty store fronts are given preference over renting to new non-giant brands. Landlords have figured out it's better to just let a storefront sit empty for years rather than rent to anyone that isn't an already giant/established brand.

TLDW: Old mall sites are very large, close to population centers, are typically located on interstates, and have existing large utility connections and so can be fast-tracked to converted distribution center.

I remember popping into three Vallco Mall in Cupertino a few times between 2016-2018.

Low occupancy and eventual death.

It was like watching an elephant die in National Geographic documentary, in slow motion.

The “wrap” fake imagery on walls covering empty stores to make them look generically occupied were surreal.

Like something out of a North Korean Potemkin Village.

Fascinating. Amazon is not only eating retail, it's eating logistics like UPS, cargo airlines, and trucking.

This sounds like a Wendover productions video. Does he work for WSJ now?

That all seems very happy-go-lucky. However, how many malls has amazon put out of business? How many malls has amazon bought for distribution centers? My guess is that ratio is not good.

So what? They have become redundant so they are going extinct. Whats the problem with progress?

From this biography of John D. Rockerfeller:

> In 1870, he established Standard Oil, which by the early 1880s controlled some 90 percent of U.S. refineries and pipelines. Critics accused Rockefeller of engaging in unethical practices, such as predatory pricing and colluding with railroads to eliminate his competitors, in order to gain a monopoly in the industry.

So what? Those competitors have become redundant so they are going extinct? What's the problem with progress?

Even if you give Amazon every benefit of the doubt regarding the ethicalness of its business practices, the fact remains that monopolies, and near-monopolies, are dangerous. We know what happens. We have hundreds of years of history to look back on to see what happens.

Amazon isn't a monopoly. Everything available there is available somewhere else. Amazon is just doing it better. They're more efficient, less expensive, and more convenient. It's a good thing.

Now, they need to start paying people better and stop the worker abuses.

FWIW, the oil companies broken up from the Standard Oil trust re-merged together anyway, as did AT&T after it was broken up.

> they need to start paying people better

https://news.ycombinator.com/item?id=18120221

In what way is Amazon a monopoly or near-monopoly?

They’re nearly 50% of US e-commerce and growing. Retail spending online is growing double-digits year over year. It’s not too hard to see the writing on the wall. Whether or not this is good or bad is a separate argument, but there’s no doubt there’s an issue with its competitive dynamics.

But e-commerce is still a minority of retail. I was surprised to learn that gas stations are the biggest retail player of all, followed by grocery stores.

How does that make them a monopoly? As a matter of fact, their platform is open to third party sellers now (which IMO has hurt their quality of service). Is 50% the magic number that deems an entity to be a monopoly? What is, and who decides?

WalMart is still leaps ahead of Amazon in revenue. It’s disingenuous and you point out a percentage metric, which is very misleading, but don’t compare hard numbers such as revenue.

Well, you just have to use common sense. It’s not like they’re 50% of the shoe button business; they’re 50% of online retail. You’re being disingenuous because you write as if that number is meaningless.

No, I’m not being disingenuous. As an investor, I care less about what percentage of online sales Amazon has. It could be 10% or 90%, but I care more about the total size of the retail space and Amazons specific dollar amount. If you heard their last earnings call, it’s clear their online growth is slowing down. Amazon understands this and they know a long term bet on it isn’t wise - hence, they’re shifting to a more physical presence, but WalMart trounces them. WalMart has the retail space strategically located across the country, and WalMart is offering competitive shipping, without requiring annual memberships. They’re holding their own in the online space. If anything, your 50% metric is an incomplete picture and a gross representation.

I’m still betting on Amazon going forward (I invested ~$2MM when they were below $300 a share, which has grown miraculously), but if their retail business was where all of Amazons eggs were put, I would have offloaded my investment a while ago.

Walmart is 4x the size of Amazon in retail revenue with plenty of growth.

It is stupid to criticize or blame amazon for wiping the floor with their competition. The rules of the game are set by lawmakers. Amazons job is to do the best they can in their business.

No it isn't, that attitude is terrible for society. There is no game, and "Amazon" doesn't have a job, the people who work there do. Running a business with the sole purpose of getting bigger and making more money is as immoral as it is common.

What makes it immoral? The idea that profit is immoral is a religious viewpoint, and one not shared by most people.

You make a lot of statements unbacked by explanations. Capitalism has produced the most peaceful and prosperous societies in the world. What exactly is better then?

I wonder what the post-Bezos future will look like after we have a single source remaining for all our daily necessities, and Amazon enters a later stage of its corporate lifecycle and begins to go the way of IBM or GE. If we replace all other stores with just Amazon, that seems like an enormous risk to human life if Amazon starts to become mismanaged in the future.

Your post is inaccurate. WalMart still beats Amazon handsomely in terms of revenue, not to mention, Amazon only recently shifted to profitability, and now their growth is declining.

This notion that Amazon has retail market capture or is close to market capture is completely inaccurate.

I mean, we had Sears previously. That is the direct analog of Amazon. I think you will always find boutiques, hybrid supermarkets and then destination like experiences. People will pay for convenience and last minute availability. Also, Amazon is filled to the brim with Chinese crap.

Amazon has gotten really bad since they opened the floodgate to Chinese crap. Alot of it is shady as fuck.

That already happened with Walmart to an extent, right? Not that I want Amazon to do the same thing...

We're not replacing all other stores with Amazon. The Amazon-takes-over-retail fantasy is not going to happen. Their online retail business is now a very slow growth business. For them to actually take over retail, they'd need to be seeing high rates of growth year after year for decades yet. At their rate of deceleration, they'll be at a mid single digits rate of growth within a couple of years. Their whole business - AWS, devices, online retail, physical retail - is going to struggle to stay above 10% sales growth in that same timeline as a matter of fact. The far bigger, more likely risk is that their traditional online retail business sees a near contraction stall four to five years out.

Walmart is still doing $500 billion in sales by comparison. Unless Amazon finds a magic way to turbocharge their online growth (1 day shipping isn't going to cut it), it'll still take 20 to 30 years to just match the size of Walmart in retail, and that's if everything goes well for Amazon.

What Amazon figured out, is that they can't kill Walmart via online retail (which is the sole segment that Amazon has any retail dominance). So they're increasingly exploring physical retail as their only way to grow. Wholefoods was Amazon being forced to buy their growth, it was a classic sign of a business that has lost much of its organic growth. Their days of serious retail growth online are dead.

Matured rather than 'dead' - that cycle is now mostly complete

Dead was the right term. It refers to the high rate of former growth in their online retail business. That high rate of growth is dead.

The business is mature. I didn't say the business was dead.

Since half of Walmarts revenues are from groceries, I wonder how much of a difference it would make if you coud use food stamps at Amazon

IBM and GE are both 100 years old, so Amazon still has plenty of room left in its game.

I'm originally from Euclid, one of the malls Amazon is snapped up. The area has been dilapidated for a while as it's a popular white flight city for East Cleveland transplants.

I remember ~15 years ago it was just Sears left.

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