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What General Growth’s CEO really said about Amazon’s expansion plans


A passing reference at the end of a conference call about’s possible plans for physical stores by General Growth Properties' CEO has taken on a life of its own with speculation raging that the online retailer will soon open 400 stores. did open its first physical bookstore last fall in Seattle amid great fanfare. And other retailers that were born online have dabbled in operating physical stores in a movement dubbed “clicks-to-bricks” that appears to be gathering momentum. How went from opening a single store to opening as many as 400 locations stemmed from comments General Growth Properties CEO Sandeep Mathrani said at the very end of the company’s fourth quarter conference call. Responding to an analyst question about holiday traffic, Mathrani offered a wide-ranging response that touched on e-commerce, the clicks-to-bricks trends and made a passing reference to what he described as his understanding of’s plans.

His response, according to a Thomson Reuters StreetEvents transcript, to the entire question about traffic and how the company measures it was:

“I think as we continue to measure them, we are happy to give the data because the irony is that the mall traffic is actually up. One of the biggest pain points during the holiday season was lack of parking so we are obviously seeing people come to the mall. We are seeing them stay longer at the mall, they are shopping a lot fewer stores when they come into the mall but they are definitely roaming the malls and shopping.

“So if you have got the product, the consumer is doing their research on their mobile device and coming into the mall to shop which is why still to date from a soft goods perspective, almost 95% of mall soft goods are bought in the bricks and mortar store. And I think the other factor that very few people really pull into the equation is that the return rate on the soft goods is incredibly high. I think it is 38% of e-commerce purchases for soft goods that are bought online and returned to the brick-and-mortar store. So to really get a true and proper understanding until the retailers start to show you exactly what the return rate is and how it is being impacted it is really hard to evaluate in this omnichannel world why one growth is bigger than the other because you have to take the return rates into account, which really no one does.

“And this case in point, you've got Amazon opening bricks and mortar bookstores and their goal is to open as I understand 300 to 400 bookstores and it should sort of sit back and say that the last mile is all-important which is why Bonobos is opening bricks-and-mortar stores and Warby Parker is opening bricks-and-mortar stores and Birchbox is cutting their overhead to open bricks-and-mortar stores.

It is a very interesting evolution because the cost of the last mile is that important and again the mall business you have to appreciate which is more focused on fashion is very different than a staple business where you are buying commodities. So in the mall business, the impact of e-commerce is a lot less, it is actually your friend, not your enemy.”

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