A look inside the box store
‘Great A&P’ traces history of first grocery store giant
In 1942, Marc Levinson notes, the economist Joseph Schumpeter coined the phrase “creative destruction’’ to describe the process by which innovation and technical advance make an industry more efficient while leaving older, less adaptable businesses by the wayside. It is basically what Sam Walton engaged in to build Walmart: demand lower prices from suppliers, cut out middlemen, slash inventories, and lower prices to build volume, thereby gaining more economies of scale, pricing smaller players out of the market.
A century earlier, Levinson demonstrates in “The Great A&P and the Struggle for Small Business in America,’’ it is what two brothers did to grow a handful of 20-foot-by-30-foot stores into the world’s largest retailer. The book is a superb business study and an entertaining history, chock-a-block with hundreds of interesting facts - and some unlovely ones, such as the poisoning capabilities of 19th-century tin cans.
Levinson, author of other business-related books, says the company that can be considered the great-great-grandparent of A&P is the Great American Tea Co., established by George Gilman in New York City in the early 1860s. In 1869 he expanded his business in accordance with his continental vision and renamed it the Great Atlantic & Pacific Tea Company.
In 1878 Gilman’s partner, George H. Hartford, assumed management of the company (three decades on he would become sole owner). In 1880 his oldest son, George L., joined the company at the age of 14, and a few years later his youngest son, John A., at the age of 16. The rest is history - nearly eight decades of history of the two sons’ increasing and finally complete control of the company until their deaths in the 1950s.
They were known throughout the industry as Mr. George and Mr. John. George was the cautious, watch-the-balance-sheet guy, John the outgoing, imaginative visionary. John’s inflexible mantra was “low prices,’’ because low prices lured customers and drove volume.
Their company’s history is that of John’s guiding its development from tiny stores selling coffee, tea, and sugar to supermarkets selling thousands of items and from two or three employees each to dozens.
For decades A&P was a retail behemoth, covering 39 states and parts of Canada, with sales more than twice those of any other retailer. It collected 10 cents of every dollar Americans spent at grocery stores. By the early 1930s it owned nearly 16,000 stores, 70 factories, and more than 100 warehouses. It was the largest coffee importer, wholesale produce dealer, and butter buyer in the nation.
Its history also traces the legal and political battles against the Hartfords and the owners of other chains by mom-and-pop stores and the businesses dependent upon them - suppliers, wholesalers, warehouses, etc. The family also faced challenges by local and state governments - concerned about the destruction of small businesses - who imposed targeted taxes on chains.
Even the federal government weighed in from time to time, accusing A&P of acting illegally in restraint of trade by using its size and market power to keep prices artificially low. In the 1940s criminal and civil lawsuits went against A&P, “the climax of decades of effort to cripple chain stores in order to protect mom-and-pop retailers and the companies that supplied them.’’
The fight was ultimately a losing one. The corner grocery slowly disappeared from the scene; on the other hand, Levinson states, millions of customers over the years enjoyed lower and lower prices.
In the end it was not lawsuits that killed the beast, but the deaths of Mr. George and Mr. John. Deprived of their vision and unable to come up with capable replacement executives, A&P quickly began slipping, staggering from one failed strategy to another, eventually reduced to a regional, Eastern presence. It became a victim, Levinson concludes, of the creative destruction it had meted out.
Roger K. Miller, a former newspaperman, is a novelist and freelance writer and reviewer. He can be reached at email@example.com.