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The Great A&P and the Struggle for Small…

The Great A&P and the Struggle for Small Business in America

by Marc Levinson

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The biography of the conglomerate synonymous with housewives and the grocery consumer. Although information is provided on George and John Hartford, the brothers who led the company for a total of 114 years, there is very little about them, which is as they liked it. Instead it is a study of how successful and ultimately unsuccessful the company became in the years of its existance. Compared, unsuccessfully I believe, to Wal-mart because of the loss of mom and pop businesses the author points out the way A&P led the grocery business in vertical integration, cutting costs by production and distribution of products and negotiating prices based on volume which in effect shut out smaller stores. The company was so successful that a succession of political figures led campaigns to punish the company before and after World War II. At this time A&P was the largest retailer in the US, larger than Sears, Penneys, Woolworths or Krogers. Ultimately housewives campaigned to keep A&P in their communities and businesses they dealt with wrote to the Justice Department opposing the lawsuit.

My father was one of the clerks at A&P after World War II until he retired. I remember sitting in the front window near the cash registers, smelling the fresh Eight O'Clock coffee being ground. I learned more about produce from him based on his years in that department. Although I heard stories about the Hartfords, it was eye opening to read an objective account of their business practices. I am passing this on to other family members. ( )
  book58lover | Aug 24, 2012 |
Largely hagiographic account of the rise and fall of A&P, which became and stayed the biggest retail chain in America for years in large part by taking advantages of economies of scale—making its own stuff and also negotiating deep discounts from wholesalers, a la Wal-Mart—and passing many of the savings on to customers, until the folks who’d run it since the 30s died and the successors took their profits and didn’t reinvest in adapting the stores to changing times. The founding family was anti-union but paternalistic, and ran the stores on the theory that too much profit was a sign that they were setting prices too high; almost unbelievably, they also didn’t believe in getting involved in politics. ( )
  rivkat | Mar 12, 2012 |
When I was growing up in upstate New York, A&P was the only supermarket that my family could get to. Now, there aren’t any around. I don’t think that there are any left in New York State at all, but there may be a few downstate. (I’m pretty sure that there are still A&Ps in New Jersey.)
I’ve often wondered how this came about, but never got around to researching the topic. This very readable history of the Great Atlantic & Pacific Tea Company has answered all my questions. The early history of A&P is fascinating, and the roots of its success were also the seeds of its downfall.
Supermarkets greatly enhanced the living standards of the working class by providing good food at low prices. It can seem sad that small stores run by local proprietors were driven out of business by the supermarkets, but I remember the poor selection of overpriced, and often substandard, merchandise available to the poor. When we could get a ride to the A&P, our food budget went much farther, and the quality of the meat and produce was much better. And , of course, the variety was almost overwhelming.
There is a parallel between the rise of the supermarket and the decline of the corner grocery in the 20th century, and the dominance of today’s big box retailers. There certainly are serious labor and trade concerns about the operation of corporations such as Wal-Mart, but lower prices are a great boon to most people. Few of us have the luxury to pay high prices for life’s essentials, even in the rich countries.
This is a readable and balanced book that provides much insight into the social and cultural history of 20th century America, as well as a history of what was once the world’s largest retailer. ( )
  WaltNoise | Oct 12, 2011 |
Besides my interest in social and economic history, I was attracted to this book because my grandmother worked for A & P for decades, retiring from the company in the late 1980s. While not a suburban icon in Washington state where I now reside, A & P was a common sight in the metro Detroit area. I can still recall when A & P changed all of their store names in southeastern Michigan in the late 1980s and early 1990s after they bought the Farmer Jack chain. The A & P brand was a staple in my childhood.

Little did I know when beginning this book that A & P was even more important to American history than it was to my own personal history. The company founder, George Gilman, was a leather trader and owned the company Gilman & Company. In around 1859, Gilman expanded his business to include tea and coffee trading. In 1863 Gilman changed the company name to the Great American Tea Company and began a mass advertising campaign, a rare occurrence in those days. Gilman was a talented promoter that used exaggeration and flair to attract customers. He also instated a novel buying club to encourage people to pool their purchases to receive discounts on bulk orders.

In 1869, the transcontinental railroad that linked the Pacific and Atlantic oceans was completed. True to his nature, Gilman launched a “new” business called the Great Atlantic & Pacific Tea Company. In actuality, however, the new company was just a front for the old company, and Gilman was using the new name to jeopardize the established business practices in the tea trade. Rather than deal in bulk like the rest of the tea companies, Gilman created a branded, pre-packaged tea called Thea-Nectar. At this point in history, there were few branded products available other than patent medicines. Most stores sold only in bulk with store clerks measuring portions for each customer. Creating a product like Thea-Nectar was a novel approach to food sales, and it would be another twenty years before the practice became common.

From the outset, the Great Atlantic & Pacific Tea Company was dogged by criticism and allegations of misconduct. Thea-Nectar, accused of being composed of damaged, low-quality tea leaves, was only the tip of the iceberg when it came to those opposing A & P. Most of the coming controversy was dealt with by the Hartfords. George H. Hartford had worked for George Gilman as a bookkeeper and manager since the early 1860s. In 1871, the two began expanding and built another store in Chicago. By 1875, there were stores in sixteen cities. George Hartford received full control of the tea company when Gilman retired 1878. Eventually he brought two of his sons, George L. and John A., into the business. Around this time, coffee and tea consumption exploded aided by expiring tariffs and duties to fund the Civil War. This caused the prices of these products to fall rapidly, and Hartford responded by expanding the product line and eventually got into the food manufacturing business to supply their stores.

By the time of George H. Hartford’s death in 1917, the company was doing swimmingly under George L.’s financial expertise and John A.’s trend-setting ideas. John was the mind behind the A & P brand, creating a tiered approach to branded merchandise based on the price of the product. He also started promotional offers such as a stamp program in which customers collected stamps by buying products that they could later redeem for other select merchandise. For all of A & P’s success, there was a big stick in the company’s craw however. Independent grocers were being stifled by the early years of the twentieth century, and they began to demand that Congress intervene on their behalf, thus beginning a decades-long battle to restrict chain stores.

The Great Atlantic & Pacific Tea Company began a new strategy in 1912 when it began opening economy stores and began using the A & P logo on storefronts. These stores were low-key enterprises that offered no credit, no premiums, and no promotional stamps. They opened economy stores at a rapid pace with more than 864 stores by 1915. Around this time, A & P and other chain stores were gaining more and more attention on the national political scene as groups attempted to thwart their growth. A & P was by far the most profitable and efficient of the chains due to their ground-breaking approach to food distribution and warehousing, placing it under particular scrutiny.

After years of political debate, extremely prohibitive taxes were imposed on chain stores by the 1920s and 1930s. In addition, numerous laws were enacted to prohibit wholesale price concessions and discounts. Although under constant pressure, the Hartfords chose to remain quiet until 1937 when they hired Carl Byoir to run a public relations campaign to counter attacks by independent grocers and politicos. A & P changed tactics again by closing hundreds of stores to avoid over-taxation, and they began opening supermarkets.

Many of these taxes were later repealed as anti-chain sentiments waned by 1940. Ironically the intervention of the federal government was under the guise of promoting competition but in actuality it did quite the opposite. Rather than try to lower prices to benefit the consumer, they instead wanted to keep prices high to support an inefficient distribution system that A & P and other chains had found ways to circumvent. By using more efficient distribution methods, A & P was able to keep their prices low and customers satisfied.

John A. died in 1951 and George L. died in 1957. Although they had a succession plan in place, their first choice, David T. Bofinger, died unexpectedly. Their second choice was Ralph W. Burger. When Burger took over, the company was thriving, but he proved to be a poor fill-in for the Hartfords by failing to innovate or watch trend lines. A & P faltered and rapidly declined in the 1960s and after. Despite all of the innovations in food marketing, improvements to grocery store services and buildings, and efforts to fight back and eventually win during the chain store wars, the Great Atlantic & Pacific Tea Company has been on a downward slope for decades since the deaths of the Hartfords.

Levinson tells this tragic story with expertise and nuanced research. This book was supremely enlightening when considering the current state of chain stores and large distribution channels in America today. It provided both historical and social perspective on the economies of scale that chains are able to accomplish and what these methods mean for the country as a whole.
1 vote Carlie | Sep 29, 2011 |
For 43 years, A & P was the largest company in the world.

That statement alone needs much more texts about this company than there are. But we have Levinson's work now and as a student of business history I have to report that it is very good. While what happens in the last years of it's life, after the founders are gone and the generation of non-family owners takes over is not delved into greatly, the rest of the tale is very well presented so that we not only see how A&P grows but also how America grows and how the two are part and parcel of each other.

A company started before the Civil War to sell tea in New York, grows to be the world's largest company for many years. The founder passes the baton to the Hartfords who grow the company into a national chain and fully explore the meaning of what a chain is.

While doing so, the company goes from defining what the local grocery store should be to what a chain and what vertical integration should be. Creating what becomes S&H or Green stamps and grocery stores. A&P has a vibrant place in history and Levinson tells a great deal about it.

Along the way we see how the ill run mom and pop grocery store (My grandparents had one run well enough to become a great profit center during the second world war) is revamped and gives rise to their success. The A&P doing so well to squeeze margin that they are the Walmart of their day and the government must come and regulate them in order to save the mom and pops. So many years of litigation that it becomes part and parcel of the american life as does the supermarket with the rise of the automobile. And with the success of the tactics that the A&P employs or invents.

Having read many business histories, while I may never read this one again, I am glad I had a chance to read this one. There are lessons here for management, and life, and a guide to thinking about how business and government need to find a better way to partner with each other. Well worth your time and written well enough that it is more of a story, then ever a text book. ( )
1 vote DWWilkin | Aug 4, 2011 |
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Amazon.com Product Description (ISBN 0809095432, Hardcover)

One of The Wall Street Journal's Best Non fiction Books of 2011.
From modest beginnings as a tea shop in New York, the Great Atlantic & Pacific Tea Company became the largest retailer in the world. It was a juggernaut, the first retailer to sell $1 billion in goods, the owner of nearly sixteen thousand stores and dozens of factories and warehouses. But its explosive growth made it a mortal threat to hundreds of thousands of mom-and-pop grocery stores. Main Street fought back tooth and nail, enlisting the state and federal governments to stop price discounting, tax chain stores, and require manufacturers to sell to mom and pop at the same prices granted to giant retailers. In a remarkable court case, the federal government pressed criminal charges against the Great A&P for selling food too cheaply—and won.
The Great A&P and the Struggle for Small Business in America is the story of a stunningly successful company that forever changed how Americans shop and what Americans eat. It is a brilliant business history, the story of how George and John Hartford took over their father’s business and reshaped it again and again, turning it into a vertically integrated behemoth that paved the way for every big-box retailer to come. George demanded a rock-solid balance sheet; John was the marketer-entrepreneur who led A&P through seven decades of rapid changes. Together, they built the modern consumer economy by turning the archaic retail industry into a highly efficient system for distributing food at low cost.

(retrieved from Amazon Thu, 12 Mar 2015 18:04:21 -0400)

(see all 2 descriptions)

Traces the rise of the Great Atlantic & Pacific Tea Company and the landmark court case through which the Federal government imposed limits on its discounts, offering insight into the pivotal ways in which the company changed how Americans shop and eat.… (more)

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