Amazon, long seen as a threat to malls, is now a hot tenant

Shopping center owners have long blasted as a destroyer of their business. Now some are starting to view Amazon as a potential savior.

At a time when Sears Holdings Corp. and Macy’s Inc. are shutting down stores, and many malls are struggling to attract high-profile tenants to fill empty spaces, the giant online retailer has been ramping up its presence in physical retail.

Amazon plans to open more Whole Foods stores that could include new formats after retreating from a smaller store experiment called 365, according to the chain’s chief executive in comments made at a forum last week. Amazon is also experimenting with different types of brick-and-mortar outlets, from book shops to pop-up stores. It is also testing cashierless convenience stores, known as Amazon Go, and “4-star” stores that sell items with a four-stars-and-above rating on its website.

Now, in what would be one of Amazon’s most aggressive moves yet into physical retail, the company is planning to launch a new grocery store chain with dozens of locations in major U.S. cities, The Wall Street Journal reported Friday citing people familiar with the matter.

Don Wood, chief executive officer of Federal Realty Investment Trust, welcomed the prospect of Amazon entering the grocery business. Federal Realty owns properties like Santana Row in San Jose, Calif., and Pike & Rose in Bethesda, Md.

“The idea of more demand from [Amazon] is a huge positive for me,” he said at a Monday property conference in Hollywood, Fla. Amazon’s move could also drive other grocers to invest significantly in their own stores, he added.

Brokers and landlords believe that Amazon—more so than other retailers—has the expertise to draw the right crowd of shoppers, given its trove of consumer data on which products have the most demand in a given location.

Amazon Prime members, who tend to have more disposable income, are considered especially desirable.

“When Amazon comes knocking, it feels like Apple has showed up,” said Jay Luchs, vice chairman at Newmark Knight Frank , a real estate consulting firm. Apple Inc. has a huge pull on mall traffic and the clout to negotiate for lower rents with landlords.

Click here for more from The Wall Street Journal, where this story was first published.