Did you know?
Abandoned Malls?
Amazon is buying up the very malls that they helped put out of business. Did you know? I did not until today.
There are certainly a lot of malls that are boarded up around the USA.
Until recently, I lived in the Philippines for about 2 decades, but here in the States, malls are becoming a thing of the past. The big thing now is online shopping. You order what you need, and in a day or two, it is delivered right to your doorstep.
In the Philippines, the mall is where it is at. Even if you don’t plan to buy anything, going to the mall is a social event. If you don’t have anything going on, you go to the mall!
Here in the United States, though, everybody seems to be busy doing something, there is not much time to go hang out at the mall, and getting the things you need is quick and convenient.
Why is Amazon buying abandoned malls?
If nobody is going to the malls anymore, why would Amazon be buying the malls? Well, there are a number of reasons for that. In short, though, these abandoned malls will no longer be malls. So, why is Amazon buying them?
Amazon wants to set up more distribution centers. Especially now that Amazon has announced 1 Day Shipping for Prime Members instead of the previous 2-day shipping. Adding more distribution centers means that the product will be closer to the customers. The more distribution centers they have, the more customers will be nearby for quick shipping and delivery.
There are actually 4 reasons that Amazon wants the malls
1. Free Space
These abandoned malls offer a lot of free space. This space is needed because Amazon sells so many products. These products are both products that Amazon owns themselves, and products owned by others (like me). Many FBA Sellers (Fulfillment by Amazon) send products in \\\to Amazon distribution centers and Amazon sells the products on their platform. After the sale is made, Amazon pays the FBA seller for the product that was sold.
So, with all of these products (millions), a lot of space is needed for storage and quick fulfillment.
2. Malls are near large population centers
Typically, malls were built near population centers. This is obvious because the large population means that a lot of potential customers are near the mall. If the malls were far from population centers nobody would go shop there.
Having Amazon fulfillment centers near population centers makes sense too because it will save on shipping costs and also get the purchases delivered much more quickly than, say if the item was shipped from several thousand miles away.
There is another advantage for Amazon though. Being near population centers means that there are plenty of potential employees nearby. Operating a fulfillment center required people. Some of these jobs are now being done by robots, but there is still a big need for people.
3. Proximity to highways
Because a lot of people went to malls, the malls were built near highways for easy access. If thousands of people wanted to go shop at the mall, they had to have an easy way to get there.
Where there are highways there are also a lot of businesses that will support the Amazon fulfillment centers. Primarily shipping companies like UPS, USPS, and so on. This will lead to to great efficiency in both shipping and receiving. Shipping of goods to customers, and receiving goods sent in by suppliers and FBA sellers.
Deliveries will be faster and also cheaper.
Another advantage of being near highways is that public transportation is likely to be readily available to bring workers to the job site, and home after work.
4. Infrastructure
There are types of infrastructure other than roads.
- Sewer
- Water
- Gas lines
- Communications (phone, Internet)
Because of this, Amazon can move in and not have to spend a lot of money building up infrastructure to get up and running.
What do I think?
Well, everything makes sense. I had not realized that Amazon was buying up abandoned malls, but after thinking it over and researching a bit, it all makes perfect sense. It would seem that Amazon has made a wise choice.
One of many things I noticed on my visits to The Philippines is that ” Mall Mania ” is in full swing. This is something that came and went here in the USA maybe around the 1980’s and 90’s. I think Cagayan De Oro has around 11 Malls and when I went to 2 of them they were jammed packed with people. On my earlier visits to Iligan City there were no malls, now there are two of them with serious talk about a third one soon.
I never did too much mall shopping here at home although I did go to Sears and Radio Shack ( when they were in business ) every once in a while. The nearest mall to me is about 10 miles away.
I do more and more buying online and a lot of that is from Amazon. Just about anything I order from them on a weekend I have by the middle of the following week and I don’t have to spend time and gas money going to the mall or anyplace else. If I want to buy a couple of CD’s or DVD which chances are the stuff I want is not available in a retail store, I can get it on Amazon and have it shipped USPS Media Mail for only $2.50 ! It cost me more than that in Gas to go to a mall for those things.
Ever try to buy service parts for an oil burner at your local plumbing supply dealer ? Most of them only sell to those with accounts or licensed contractors. I do my own maintenance on my oil burner and things like nozzles, filters, electronic controllers etc. are readily available on Amazon for the same or lower price than the local parts house wants for them.
Just this past weekend the air filter on my lawn mower disintegrated ! A few minutes on Amazon and I found the exact replacement, ordered it and it should be delivered tomorrow ! Only 3 days at the regular shipping rate.
Something else that many may not know about is that UPS and USPS are working together for faster delivery and maybe keeping shipping costs reasonable is ” Last Mile Delivery “. UPS does not go to every address every day and yet the Post Office does. On many smaller and medium sized parcels that are originally sent UPS, are pre sorted by UPS and then UPS takes them to a district or regional Postal Processing Center ( I used to work in one so I know ) From the Postal Processing center the parcels are sorted and sent to their respective local post offices within 24 hours. The local post offices then deliver the item to the intended address same day or the next. This greatly enhances delivery times as if UPS had to make all of those residential deliveries it would probably overload their facilities and they would have to put a lot more trucks and drivers on the road.
You have made a good point Bob, there are a lot of abandon shopping malls ( you can view a lot of them on Youtube ) . Amazon taking them over makes a lot of sense and creates a lot of jobs as well.
Video: An example of an Abandon Shopping Mall
https://www.youtube.com/watch?v=092lMeue8y0
Hi Bob – How are you doing?
You are right, malls are the highlight of life in the Philippines! They are everywhere and full of people. People go there to enjoy the air conditioning!
I buy almost everything we need on Amazon, Walmart.com, or eBay. We buy perishable products at our local Walmart store – meat, dairy, vegetables. Most everything else gets delivered.
We are Amazon Prime members, so we get free 2-day shipping (soon it will be 1-day shipping) for free.
I have indeed noticed that UPS and USPS are working in tandem on some orders! Goes through UPS, then handed off to USPS for final delivery.
I agree I think this is a fantastic move for Amazon. They can get those abandoned malls cheap, and put them to good use, also employing more people.
Take a look at this video, Bob. This is our old mall here in Logansport. There is still one store open, but I hear they are closing soon.
https://www.youtube.com/watch?v=HwYp6ZEUFh4
I think some of the things that are the demise of the malls here are that the ” Lets hang out at the Mall ” generation has grown up. Mall Prices where due to the higher rents many things had to be purchased at full list price. When we experienced ” Mall Mania ” here in the USA, online buying was in its infancy, if at all. Many of the mall anchor and ” Mall Stores ” ( stores found mostly only in shopping malls ) have gone out of business nationally or are having bad financial times. The mall nearest me ” Danbury fair Mall ” in Danbury CT has lost some stores and Sears which used to have two floors has consolidated everything to just one floor. I havn’t been to my local mall in many years now maybe I should visit it to see whats left.
Will jobs be lost by all of these closing Malls and take over by Amazon ? I don’t think so. As far as I know most retail jobs don’t pay much more than minimum wage and many are no longer full time which equals no benifits such as health, vacation or sick time, etc.
At first many may think working in an Amazon warehouse or distribution center would be not much more that being a part time parts picker / packer etc. To some extent this may be true but Amazon runs on automation and an automation tech makes a lot more than a retail clerk or parts picker. They are going to need computer techs, automation techs, a maintenance and parts department for all of that automation which will be running 24 / 7 365 days a year ! Other than maintenance windows if any of the automation malfunctions or breaks down it must be put back in service FAST FAST FAST. For 20 years I did maintenance and repair of parcel sorting automation equipment for the Postal Service so I know first hand how technical and critical it is to have all of that automation equipment in peak operating condition at all times.
When a mall closes down all of those retail jobs are gone. Amazon buying up those deserted malls will bring back better jobs and most likely better pay than were offered in mall stores. Some malls will survive but for a lot of them they won’t be coming back. The ” Lets hang out at the mall ” days are long gone.
Personally, I think that the biggest reason for the demise of malls is online shipping. Yes, the Mall generation has grown up, and we all have jobs and are busy. So easy to pull out your phone, open the Amazon app (or the Walmart app) and order whatever you need. In many cases, it will be there the next day, or in two days.
I agree that the warehouses will offer good jobs. Also, lower paying jobs, but give people the opportunity for training and moving up into the higher level of pay and responsibility.
In short, I think it is a win-win.
Hi Bob,
When my younger son was ten we went to the local mall in Portland, OR looking for pants for school (a parochial school that required blue corduroys). The first store we went to was one of the popular mega-stores, but found the pants did not fit his body. We then went on a safari through the mall and found that all the mall stores had purchased the same exact brand of pants. That was the last time I went to the mall first. It was also the last time my son wanted to hang out at the mall.
When I had a contract in Columbia, SC I saw at least two malls that were dying. I was sure there was something that could be done with them. I thought they would make great urgent care centers since they didn’t have a close by hospital. Sounds like Amazon’s business model is scalable – look to them becoming regional distribution centers for other businesses. I already buy stuff on Amazon that comes in a Walmart box, so I expect Walmart might use them for fulfilling their brick and mortar store inventory.
I also I like the idea of going into those distressed areas and creating jobs. And as Bob from NY said they are not all low paid picking jobs. The one mall we have in Butte is dying and I would love to see it become a distribution center. The placement is certainly ideal. The mall owner, from what I hear, is really hard to deal with though.
Hi Tony – Nice to hear from you. I heard there is still some snow and ice in parts of Montana! Stay warm!
When we were in the Philippines, I did hang out at the mall at times. Being here.. do I miss it? Not at all. I do most all of my shopping online and have it delivered. For meat, dairy, veggies and such, I go to Walmart. I think my shopping is typical of others too, making malls obsolete.
Yes, I get stuff that I buy from Amazon that comes in Walmart boxes too. This is not supposed to happen but it is because FBA sellers (like me) sell on Amazon and are not shipping in approved boxes. They can get their accounts suspended for that, but it does happen.
I agree that Amazon putting distribution centers in those areas where malls have died will be a renaissance to those distressed areas and bring them back to life.
One of the reasons too that malls are thriving in he Philippines is the CHEAP LABOR to maintain and operate them. The mall operators don’t have to pay benefits for their employees because of the contractual status where in 6 months or less they are replaced with new ones. They are like dispensable commodities. Here in America mall operators don’t do that. Aside of paying the hourly minimum wage(which most of the time are higher than the DAILY minimum wage in the Philippines), they have to pay too for other benefits as law dictates it.
Yep, having lived in the Philippines for more than 1/3 of my life, I am very familiar with what you say, and you are correct. However, I don’t think that the employee cost issue is the main reason for the demise of malls here. I think it is more the convenience of online shopping, making it the preference of the consumer. So, less of them go to the mall.