If You Can’t Make it There

New York played hardball, and Amazon said, “We’re outta here!” It’s the yin and yang of doing business in the country’s toughest city, even for the world’s biggest companies. Just ask Walmart
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Posted March 5, 2019

When Amazon.com (Seattle) held its nearly year-long lottery for a second headquarters location, just about every large city applied, even though some knew they were overreaching. (Louisville, my adopted hometown, thought it stood a reasonable chance, given that it already had one of Amazon’s bigger distribution centers, located near UPS’s largest shipping hub in the country. Louisville, like almost all of metropolitan North America, was to be disappointed.)

First the carrot: A little more than a year ago, in January 2018, Amazon narrowed its search to 20 finalists, mostly heavyweights like Toronto, Atlanta, Los Angeles, Philadelphia and Dallas. That logotype Amazon smile beaming on them was like a delayed Christmas present to the anointed few.

Then the stick: Okay, anointed few, Amazon declared, time to pony up. Time to empty your pockets and start bidding. Most were to discover that if you hold the carton upside down, Amazon’s smile turns into a frown.

When the choices were finally announced, one of the chosen two was Crystal City, Va., essentially a Northern Virginia satellite of Washington, D.C., that also includes Pentagon City and Potomac Yard.

The other was New York, sort of a meeting of the gods on Mount Olympus. The country’s biggest city and the country’s biggest retailer.

Amazon was impressed by New York’s sizable pool of skilled talent, by its finance, banking and media institutions, and by a strong statewide network of universities (Columbia, Cornell, NYU, University of Rochester and dozens of others – plus neighboring Princeton, Yale, MIT and Harvard, which always feed New York’s white collar and high-tech forces).

And then there was, simply, the glamour and prestige of a New York location. Jeff Bezos went to school at Princeton and worked on Wall Street for nearly a decade before launching Amazon in 1994. He well knew the A-Number One king of the hill and top of the heap.

But what really got Amazon’s attention was what it was after from the git-go – the billions of dollars in incentives offered by both New York state and city.

New York, New York, the American city so important that you have to say its name twice. The Big Apple never seemed so polished. But often there’s an unexpected worm lurking.

Opposition came quickly and surprisingly, mostly centering on those billions of giveaway dollars. What about the city’s infrastructure that it could never seem able to afford to fix? What about the very subways, bridges and roads that would carry Amazon employees to work? What about schools, teachers, jobs, housing?

One of the strongest voices in opposition was that of activist-turned-U.S. congresswoman Alexandria Ocasio-Cortez. But she was far from alone. The wave grew and crescendoed, driving local enthusiasm for the deal even lower than it currently is for the Knicks.

So Bezos tossed two bits on the table, said, “Thanks for nothin’. Fuggedaboudit,” and walked out the door, apparently blindsiding Gov. Andrew Cuomo and Mayor Bill de Blasio.

The Amazon CEO’s sudden, perhaps painful, divorce with New York seemed to mirror what was going on in his very public private life. After all, it was Bezos who left, but it was New York who said, “get lost” to the world’s largest retailer – and not for the first time.

For years, New York rebuffed all efforts by Walmart Inc. (Bentonville, Ark.), then the biggest and baddest in the kingdom, to open a foothold there. The issues seemed familiar in principle. Anti-competition would destroy most local retailers. The city’s well-known traffic and parking issues would be exacerbated. Walmart would bring jobs, yes, but what about its notorious labor practices, low wages and anti-union policies?

Interestingly, just as Amazon was fighting a losing public relations battle that gobbled up all of the oxygen, Walmart finally got in, though it was through the back door. It wouldn’t be one of its 250,000-square-foot superstores, but rather a warehouse and distribution center in the Bronx for its Jet.com e-commerce business.

Which makes it all really interesting, because Amazon changed the way people shopped, and now Walmart has used the Amazon model as a way finally to plant a flag in Gotham just as Amazon was losing that very battle. It was a battle Walmart knew all too well.

When once-mighty Walmart becomes an underdog eager for the scraps it’s being given, it makes you wonder what’s on the horizon for now-mighty Amazon. Whatever it is, it likely won’t be in New York. Or will it? Even now, Cuomo is beseeching Bezos to change his mind and come back into the loving arms of the city.

As for Bezos, who’s publicly caught up in a loving-arms issue on the other coast – one that, given some of the personalities involved, might jeopardize his D.C. standing, as well – his response to the governor’s plea will likely be: It’s up to you, New York, New York.

As a journalist, writer, editor and commentator, Steve Kaufman has been watching the store design industry for 20-plus years. He has seen the business cycle through retailtainment, minimalism, category killers, big boxes, pop-ups, custom stores, global roll-outs, international sourcing, interactive kiosks, the emergence of China, the various definitions of “branding” and Amazon.com. He has reported on the rise of brand concept shops, the demise of brand concept shops and the resurgence of brand concept shops. He has been an eyewitness to the reality that nothing stays the same, except the retailer-shopper relationship.