Giant mall owner Simon Property Group is pursuing an unorthodox business strategy, smashing the foundation of the traditional industry model on the one hand while trying to glue certain elements of it back together with the other, the Wall Street Journal reported. Simon has been in talks with Amazon.com Inc. to convert department stores into warehouse distribution hubs, an innovation that could plug large holes filled by ailing tenants such as Sears Holdings Corp. and J.C. Penney Co. But the move would challenge a long-held industry belief that anchor tenants are crucial for attracting foot traffic to other stores. At the same time, Simon has been trying to keep aspects of the old business model intact, despite heightened pressure from e-commerce and other forces that have pushed some once-prominent retailers into bankruptcy. It is using cash to help stabilize some companies whose demise would mean closing stores in Simon malls. The mall operator and a partner recently agreed to buy apparel retailers Brooks Brothers Inc. and Lucky Brand Dungarees LLC out of chapter 11. With another partner, Simon is in advanced talks to buy J.C. Penney.
