American TV’s demise offers lessons about competing in new economic climate
With 11 stores and more than 1,000 employees spread over three states, American TV & Appliance stood as an iconic homegrown billboard for “too big to fail.”
But fail it has, after a run that spanned 60 years, in part because the innovation that characterized American in its “Crazy TV Lenny” days faded into static on a black-and-white picture tube. Competing on price alone no longer worked in an era when the Internet guaranteed someone could always sell for less.
As American prepares to shut its doors, lessons about competing on quality, service, product, and price can be found in recent company expansions in Wisconsin.
Amazon.com may strike some people as the kind of online company that led to American TV’s demise, but the secret to Amazon’s success is more than the triumph of clicks over bricks. From its roots in book sales, Amazon has grown into the world’s largest online retailer, offering consumers seemingly endless choices for products — new, used, and virtual.
With those clicks come bricks in the form of distribution centers, the likes of which Amazon will build in Kenosha over the next few years. The first phase will span 1 million square feet and a second will cover half that size, with a total investment reported as roughly $200 million. About 1,200 good-paying jobs will be created over time.
Wisconsin competed with 12 other states for the Amazon project and won, not just because it offered tax breaks and incentives, but also because a partnership emerged between state and local governments. Confidential talks between Amazon and the Wisconsin Economic Development Corp. began in late 2012 and concluded inside a year with local assistance.
Some benefits are already showing up in state tax coffers: With the future distribution center giving the company a physical presence in Wisconsin, Amazon began collecting taxes on sales to Wisconsin residents last fall. That will raise about $30 million in the first year alone.
Why Kenosha? Beyond the partnership, key factors were land, location, and logistics. Amazon prides itself on speedy delivery, which is facilitated by being within a half-hour of Milwaukee’s airport and minutes of the interstate highway system. Several other distribution centers and light industrial projects have been landed by Kenosha for similar reasons.
Another success story that revolves around innovation and consumer service is United Natural Foods, a leading distributor of organic, natural, and specialty foods. United Natural Foods is in the midst of hiring about 220 workers for its $40 million Sturtevant distribution center, which covers 425,000 square feet. Total employment at the Racine County site could hit about 260 within five years.
Again, land and logistics made a difference, but so did workforce, state and local partnerships, and a streamlined permit process.
United Natural Foods must have felt good about the Sturtevant process because it recently announced plans to build a $38 million distribution center in Prescott, near the Minnesota border, that will create up to 314 jobs over three years. The story behind the second facility was much the same as the first, with location, overall business costs, and state and local government cooperation combining to pave the way.
That’s not just a Wisconsin phenomenon. Two years ago, when Site Selection magazine surveyed corporate experts on their most important location criteria, state and local tax climate was No. 1 on the list. Transportation infrastructure, utility infrastructure, and land and building prices and supply were second, third, and fourth, respectively. Wisconsin is well positioned to deliver on all three, and perhaps the first.
For every older business model that fades away, there is an innovative successor. It’s a part of the process economists call “creative destruction,” the notion that new ideas naturally push up from below to crowd out those the market no longer supports. No one should celebrate American TV’s demise, but it’s good to know Wisconsin is poised to attract and grow the next generation.
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