MADISON, WIS. — Friends and suppliers of American were saddened, if not surprised, by the TV, appliance and furniture chain’s decision to shut its doors in April after succumbing to a mix of strategic missteps and economic pressures.
The privately held retailer, which had served Wisconsin and surrounding markets for 60 years with as many as 15 big-box stores, said it is going into receivership due to an “unforgiving” economy, and was holding liquidation sales at press time.
Industry observers said the closely held company, led for nearly a quarter of a century by president, CEO and majority shareholder Doug Reuhl, was a principled and highly respected operation.
They said this was demonstrated even at the end by American’s decision to pursue a Chapter 128 receivership under Wisconsin law, rather than a Chapter 11 or 7 bankruptcy, to help ensure that its vendors get paid.
“It’s a sad time,” observed Bill Trawick, president/executive director of NATM Buying Corp., American’s former buying group. “It was a great, great organization with very, very solid people. They were not disruptive, and were one of the good ones.”
Trawick, who remains close with American’s executive VP Keith Zimmerman and former CE division chief Dave Shepard, said the company was impacted by its ill-fated expansion into St. Louis, the acquisition of appliance distributor Kennedy-Hahn on the eve of the recession, and limited financing opportunities for a private retailer.
The issues were only compounded by softness in the TV business, he said.
Trawick added that American leaves “a big void in a good market,” which will likely be filled by national chains until a regional player like hhgregg steps in.
Jim Minarik, chairman/CEO of DEI Holdings, agreed that “the collapse of TV prices and margins has had a huge impact on traditional CE retailers” but is unsure why American’s substantial furniture business didn’t pick up the slack.
All creditors will likely get paid under the Chapter 128 receivership, he said, as American’s assets exceed its liabilities, although it could be a multiyear process. “But getting paid is only a part of a disaster like this,” he noted. “The bigger long-term impacts to DEI and all of our competitors is that we’ve lost another good place to sell our products to consumers.”
Another CE supplier in part blamed American’s reliance on low-margin TV sales for its demise and pointed out that the business model is “not unique” to American. “The TV boom was fantastic, but prices fell and margins went away,” the supplier said. “Those who are thriving are focused on attaching audio to a TV sale, whether a soundbar or HTiB,” he noted.
This supplier also contended that American did not embrace e-commerce with a robust website that enabled consumers to buy online and pick up at the store at their leisure. “They had very little e-commerce presence.”
For its part, GE Appliances acknowledged the “tough dynamics across many of the categories in which American competes that makes today’s retail environment very challenging,” relayed company spokeswoman Julie Wood. “American has been a valued GE customer for many years,” she said, “and we are saddened to see them close their doors.”
Wood added that the manufacturer will “look for opportunities to continue to provide value for GE consumers in those markets going forward.”
But LG Electronics USA believes American “is an isolated issue and not the canary in the mineshaft,” noted John Riddle, home appliances regional sales VP. “Wisconsin is a strong retail market, especially in home appliances [and] the resilient TV/appliance retail sector has generally weathered the storm as the U.S. economy rebounds.”
Warren Chaiken, president/COO of national CE and white-goods distributor Almo, lamented the loss of a major regional chain and former customer. “It’s not good for the industry when we lose a quality retailer and when the consumer has fewer choices,” he said. Chaiken added that American’s misfortune should serve as a reminder that “those who don’t add value” and bring something unique to the marketplace risk the same fate.
Rian Cain, senior VP at Haier America and former American VP, said the dealer “has done a wonderful job of serving the retail consumer, the contract industry and the communities in which they are located” throughout the last 60 years. “Their employees were a great blend of passion for the business and compassion for the customer and they will be missed, but I am sure as individuals they will go on to great things in the future.”
In a posting to TWICE.com, Steven Winokur, partner and co-founder of First Delta Group, a 34-year-old manufacturer’s rep firm, similarly described American as “an exceptional retailer, a wonderful family, an innovative pioneer and the most ethical retailer we have ever done business with. It has been a privilege, our honor and pleasure to have done business with American.”
In a statement, American’s Reuhl said, “Words cannot adequately express how grateful we are to our millions of loyal customers, and to the incredible, dedicated family of employees that we have been blessed with over our 60 years of business. … While this is a sad moment, it is also a proud moment. It’s a moment to be proud of our efforts and to be proud of what we have delivered to the community.” – Additional reporting by Joseph Palenchar