On a visit to the A&P supermarket in Jefferson City, Missouri, when I was small, my grandfather, a retired farmer, began piling sacks of sugar into our shopping cart. “Why so much sugar, Grandpa?” I asked. With a poker face he replied, “You have to get it before the hoarders do.”
Someone had to explain hoarding to me, but in that time of prosperity I could not have fathomed what the low prices and plenty of the “A&P” must have meant to Americans who had experienced the Depression and World War II rationing.
But my own grandfather probably did not know then—as documented in Marc Levinson’s highly readable “The Great A&P and the Struggle for Small Business in America”—that after an ascent from the early 1900s, the nation’s dominant grocery chain was already poised to decline; today it is in bankruptcy, its once-familiar logo practically absent from the American marketplace.
Since before World War I, this chain of modest beginnings was led by a pair of brothers, George and John Hartford, through a half century of fresh growth, the first retailer to achieve one-billion dollars in sales, on the brink of the Depression—two and a half times the revenue of number two Sears, Roebuck.
By Levinson’s account, while George carefully managed the purse strings, John adroitly handled marketing and management. During initial expansion of the Great Atlantic and Pacific Tea Company, “A&P” groceries were modest affairs offering uniform food products at low prices, at first not handling perishable produce. Their low pricing was made possible by bulk buying from producers, eliminating jobbers and wholesalers from the supply chain.
Efficient stocking and warehousing enabled the chain to begin stocking perishables—purveying them in generally fresher condition than “mom and pop” competitors—and ultimately to wholesale to the produce trade, too. A&P also entered food manufacturing.
A&P was comparatively late to the supermarket phenomenon, but made up for lost time with a vengeance. Through market ups and downs, John Hartford resisted pressure from his own unit managers to let low prices drift upward to improve company bottom lines in the short run. He insisted that keeping prices low and margins narrow was the formula for long-term success.
During these decades, as previously, Levinson writes that A&P’s success was predicated on aggressively outdoing its competitors; it did this in the open market without seeking government favors or unfair combinations. “A&P’s century-long record of growth was due not to mergers or cartels but to astute management,” writes Levinson.
In fact, Levinson documents, it might have done better to face directly a powerful anti-chain public opinion in the thirties that generated congressional investigations, the Robinson-Patman Act and stiff progressive taxes on chain stores in some states.
The “creative destruction” that benefited American grocery buyers left as its victims small local stores: The “Hartfords’ sharp competitive elbows ultimately got them into trouble. As A&P flourished, America’s understanding of itself as a free-market economy came into conflict with an equally potent myth, one that places small business at the core of a democratic society.”
Levinson compares the controversy surrounding A&P long ago with that involving Walmart today. He challenges the bias that small businesses are the chief generators of economic change: “Most small businesses neither grow nor innovate. … The magic comes from the relative handful of enterprises, whether small or large…”
The business that thrives on competition can die the same way, and according to Levinson A&P failed because it ceased to adapt; size and simple competence did not save it. In business, there is no hoarding good fortune.
“The Great A&P” offers a great object lesson, and while you may not agree with some of the author’s notions, it is American business history—warts and all—as it is meant to be written. (Martin Northway)
“The Great A&P and the Struggle for Small Business in America”
By Marc Levinson
Hill and Wang, 366 pages, $28