Knowing my interest in attacks on the shopping mall business model, a friend of mine shared the plotline of the popular Netflix show “Stranger Things.”

On the show, a grotesque monster called Mind Flayer terrorizes a small town in Indiana. This monster comes from a parallel universe called the Upside Down and enters the town through its shopping mall. Once in the town, the Mind Flayer stalks, destroys, and takes over the shells of its victims, transforming their bodies into unwitting accomplices. The monster uses this accumulated strength in a climactic battle that lays waste to the town’s mall.

Hearing this plot, Amazon came to mind immediately. Like Mind Flayer, Amazon seems to come from an Upside Down universe. At its inception, Amazon was online when other retailers were store-based. As Amazon grew, it pursued opportunities like device development and web hosting that seemed far afield for a retail company. Recently, while COVID-19 decimated traditional retailers, Amazon's revenue was up 40% in Q2 2020, and its profitability was over $5 billion for the quarter.

But a new initiative by Amazon just begs comparison with “Stranger Things.” Amazon is in talks to take over the shuttered spaces of beleaguered mall anchors like JC Penney and Sears. The goal is to use the husks of those defeated retailers to strengthen Amazon’s business and operating models. Amazon would transform these empty stores into distribution centers located close to residential areas, helping to speed the “last mile” of delivery that has been so important to Amazon’s success.

For mall landlords, this move shows a willingness to surrender the foot traffic of anchor retailers that was once the lifeblood of the shopping mall model. In return, they will accept the long-term lease dollars that come from supporting their victor’s operating model.

Just last week we saw another example of Amazon’s Upside Down mindset and propensity to occupy the bodies of its victims. At a moment when many companies are retreating from centrally located office towers amid pandemic-generated work-from-home policies, Amazon is betting aggressively on the value of face-to-face work. The company recently announced plans to add 3,500 corporate jobs in six cities, including in the historic Manhattan building that once housed the flagship store of bankrupt retail legend Lord & Taylor.

Like Mind Flayer, Amazon lurks. With extraordinary attentiveness, Amazon watches everything happening in the economy. It watches technological advances. It watches consumer behavior. It watches sociological factors. Amazon watches not through the lens of the conventional wisdom, but through its unique perspective of scale, financial strength, desire for profit, and interdependent products and services. All the while, Amazon tests—new delivery approaches, new service lines, and new industry verticals. When testing suggests an opportunity, Amazon strikes.

Currently, Amazon is lurking in healthcare. Last year, the company opened its first employee clinic in Seattle, with a focus on preventive services. This summer, Amazon announced plans in concert with Crossover Health to open 20 health centers nationwide by the end of the year for warehouse workers and their families, with plans for further expansion in 2021. Without any doubt, Amazon is seeing how COVID-19 has catalyzed virtual care, and is assessing how the company’s skill in digitizing interactions and creating convenient access to services could fill a gap created by COVID in the current healthcare delivery system.

In the business world, good and evil are not so clearly demarcated as they are on TV shows, and storybook endings are much harder to manufacture. Amazon is not going away. It continues to lurk and selectively make its moves. Any continued success of America’s healthcare organizations will depend on their ability to maneuver around increasing vulnerabilities and to move more quickly in a remarkably uncertain environment.

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Kenneth Kaufman

Managing Director, Chair
Kenneth Kaufman offers deep insights on the economic, technological, and competitive forces undermining healthcare’s traditional business model.
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