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Amazon’s Facing Pushback From Whole Foods’ Neighbors

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It’s tough to be the new kid on the block.

Amazon’s brick-and-mortar push is facing opposition from competitors who have the ear of landlords thanks to language in their leases.

While property managers may be happy to have a Whole Foods on the premises, in some cases those leases come with stipulations—not from the real estate company itself but from the grocery stores and big box retailers that got there first.

The web may be Amazon’s playground, but Reuters reports that retailers like Target, Bed, Bath & Beyond and Lidl are showing that they’re prepared to play hardball to protect sales.

In several instances, the news source obtained leases which expressly prohibit neighboring retailers from using stores as pickup locations for online orders or selling goods in specific categories.

And when it’s not fellow retailers throwing up roadblocks, it can sometimes be local governments. Specifically, it’s reported that White Plains, New York has put parameters around when one Whole Foods location can load in goods.

An unnamed source said the growing Lidl chain is saying retailers like Walmart and Amazon that sell groceries can’t offer pick-up services if they’re going to be neighbors. Meanwhile in Manhattan where Bed, Bath & Beyond and Whole Foods are next door, the former has barred the latter from muscling in on particular departments like bathroom items and housewares.

[Read about the tenant mix in shopping malls today: How Open-Air Shopping Centers Are Sidestepping the Mall Meltdown]

At Miami’s Pinecrest Place mall, Target has reportedly stipulated that other stores there can’t have storage devices like Amazon’s pick-up lockers as well as language about whether pet stores and toy stores are allowed nearby.

For it’s part, Target released a statement to the publication saying it is “focused on what’s best for the company and delivering on the reasons our guests love Target. Our more than 1,800 stores across the country are a strategic asset and a vital part of Target’s future.”

Further, the company statement said: “It’s inaccurate to characterize lease agreements as our corporate strategy.”

Clauses like those outlined by Reuters may eat into Amazon’s ability to use Whole Foods locations as it sees fit, however. The news outlet reports that just under a third of Whole Foods 470 locations are a mile or less from a Target store, with 7 percent less than a quarter of a mile away.

Retailers’ demands have been a hot topic lately as the contraction in the landscape is sometimes forcing landlords to get creative to fill the space. Increasingly, malls and strip centers—especially those of the B and C variety—are welcoming more offices, gyms and play areas than they have in the past. But in some cases, stores have balked at these new tenants and the corresponding redevelopment plans. And thanks to co-tenancy clauses in leases that often require a specific retail makeup, landlords are restricted from making certain deals.

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