Why Amazon and Walmart Suddenly Like Malls

Walmart is expanding its real estate portfolio with a major acquisition.

The retail giant has purchased Monroeville Mall near Pittsburgh for $34 million and plans to redevelop the site. The project will focus on retail and mixed-use development, with new dining options and possibly residential units.

The Monroeville Mall spans 985,073 square feet and features 133 stores, such as Dick’s Sporting Goods, Macy’s, Best Buy, Barnes & Noble, Forever 21, Victoria’s Secret, and JCPenney. The 185,517-square-foot Annex includes eight stores and the combined property attracted nearly 3.5 million visitors in 2023.

Malls Into Distribution Centers

Not to be outdone, Amazon has repurposed struggling malls into distribution centers, breathing new life into properties. Amazon acquired several former malls, including locations in Baton Rouge, Louisiana; Knoxville, Tennessee; and Worcester, Massachusetts, to convert them into fulfillment centers. Between 2016 and 2019, Amazon converted around 25 malls, and it also explored turning former department stores into distribution hubs. As many malls face declining cash flow and closures, selling them as land for redevelopment became an appealing option.

Mall expert Paco Underhill recently told PYMNTS U.S. malls are facing challenges with vacancies, declining foot traffic, and more competition from eCommerce. Underhill believes there will be more mixed-use developments where malls serve as hubs for various activities beyond shopping, including incorporating housing, offices, healthcare facilities and even government buildings.

While malls face an uncertain future, Amazon is thriving through expansion of its cloud business. With growth expected in Amazon Web Services (AWS), the company is scheduled to report Q4 earnings Thursday (Feb. 6). Wall Street predicts a 19.3% year-over-year increase in AWS revenue, marking the largest growth in two years.

Here’s a look at other notable developments from Amazon and Walmart:

Amazon Highlights

Amazon Scales Back Physical Retail, Shifts Focus to Grocery Stores: Amazon’s physical retail efforts have struggled, with the company reducing its Amazon Go store portfolio by half since 2023, now operating 16 stores in four states. While initially focused on developing cashier-less technology, Amazon is shifting to licensing its Just Walk Out technology to other retailers and concentrating on grocery stores. The company’s foray into brick-and-mortar retail has also faltered, as it has closed multiple locations, including bookstores and fashion outlets. Experts argue that Amazon’s online success hasn’t translated into effective physical retail, with challenges in customer service and shopping experiences.

Amazon Prime Delivers Record Speed and Savings in 2024: In 2024, Amazon Prime members received the fastest delivery speeds ever, saving nearly $95 billion globally on fast, free deliveries. Amazon expanded Same-Day Delivery sites by more than 60%, delivering more than 9 billion items globally, and members in the U.S. saved an average of $500. The company enhanced its logistics and inventory by placing products closer to customers, improving speed and safety.

Walmart Highlights

Walmart to Cut Jobs, Close N.C. Office Ahead of Q4 Results: Walmart is set to lay off several hundred corporate employees and close its North Carolina office as part of a restructuring plan ahead of its earnings report on Feb. 20. The company is requiring office employees in Hoboken, New Jersey, and other locations to relocate to Bentonville, Arkansas, or Sunnyvale, California, with relocation assistance or severance offered. Despite these changes, Walmart’s stock has risen 21% in the past three months and 81% over the past year. Analysts expect the company’s Q4 revenue to increase by 4%, driven by eCommerce and membership growth.

Walmart to Invest $6.5 Billion in Growth, New Stores by 2027: Walmart Canada is investing $6.5 billion over the next five years to accelerate its growth, including building new supercenters in Ontario, Alberta, and other locations. Notable developments include the opening of a Port Credit Supercenter in 2025, an Oakville Supercenter in 2025, and additional stores in Calgary, Edmonton, and Fort McMurray by 2027. The company is also enhancing its supply chain with a new Vaughan Distribution Center in 2025. This follows a successful $3.5 billion investment from 2020, which included store modernizations and new facilities.