Why Would Amazon Scope Out JCPenney? It’s The Real Estate, Baby!
Dallas Bisnow, May 19, 2020, by Kerri Panchuk
Rumor has it struggling JCPenney Co. is a possible acquisition target for Jeff Bezos' Amazon.
JCPenney filed for Chapter 11 bankruptcy Friday and said it would close about 240 of its 846 stores permanently over the next two years. If Amazon stepped in and bought the company, it could be a quick, relatively cheap way to get a large brick-and-mortar footprint, similar to its acquisition of Whole Foods in 2017.
The e-commerce giant hasn't confirmed or denied reports of a possible Penney's acquisition probe, with a spokesperson for Amazon telling Bisnow Tuesday the retailer doesn't respond to rumors. But this is a big rumor, considering the e-commerce giant is often considered the final stake through the heart of department stores like Plano, Texas-based JCPenney.
Retail experts believe Amazon is either expanding its apparel vertical or shopping for prime space in key suburban markets where it desires additional last-mile delivery locations or package pickup and drop-off hubs.
The idea that Bezos and Amazon see Penney's as a real estate play is not a stretch for market observers. Several days ago, news reports said Penney's planned to spin off its real estate holdings into a separate REIT. Analysts previously told Bisnow many of Penney's assets are valuable enough to make it through bankruptcy.
With Penney's, like most department stores, holding key sites in consumer-centric neighborhoods, Amazon could pick up a massive distribution footprint on the cheap to get deliveries closer to customers.
Penney's has a strong network of stores in rural and urban areas in some of the largest U.S. states, with 82 in Texas, 71 in California and 52 in Florida alone.
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