Yes, Amazon Is Killing Retail & REITs

The “Amazon Effect” has forced all retailers to step up their “omnichannel” game or face extinction. The ominichannel phenomenon is the ability to compete through brick and mortar and online by redesigning distribution networks and streamline supply chain operations to best serve customers on and offline.

Treasury Secretary Steven Mnuchin said Wednesday the Justice Department is right to be looking into Amazon’s practices as part of its antitrust review of big technology companies.

“I think if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States so there’s no question they’ve limited competition,” Mnuchin told CNBC’s “Squawk Box. ”


OK, so you aren’t a retailer, but what if you are a REIT that houses retailers?  An omnichannel strategy isn’t a choice.  What about if you are a REIT, who is housing J.C. Penny? I would say you are no better off than the retailer.

Washington Prime Group Inc. is a retail REIT and a recognized leader in the ownership, management, acquisition and development of retail properties.  Pennsylvania Real Estate Investment Trust is a publicly traded real estate investment trust that owns and manages quality properties in compelling markets.

2019 has been a bad year for most mall REITs. With the number of U.S. store closures on pace to hit a record this year, investors have soured on owners of retail real estate, particularly owners of mid-tier malls.

The carnage worsened over the past week. Shares of Washington Prime Group (NYSE:WPG) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) both tumbled more than 10% between last Wednesday and the end of trading on Monday. (Both REIT stocks recovered a bit on Tuesday.) The main catalyst was a report that came out on Thursday evening indicating that J.C. Penney (NYSE:JCP) had hired advisors to study options for restructuring its debt.


If you connecting the dots, then you know what’s happening to both Washington Prime Group (NYSE:WPG)

and Pennsylvania Real Estate Investment Trust (NYSE:PEI)

They are both getting Amazoned.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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