Though it went mostly unnoticed, A&P, the once-ubiquitous grocery chain, filed for bankruptcy last year. Other than residents of the East Coast—where several hundred stores remain in operation—many Americans have likely never set foot in one of the chain’s supermarkets. Today the company is more than $3 billion in debt and long-since overcome by competitors. But there was a time, less than a century ago, when A&P was one of the largest retailers in the U.S., with stores from coast to coast and a trailblazing business model that overwhelmed independent rivals and even earned the enmity of the federal government.
The A&P story, an economic soap opera with contemporary resonance, is compellingly told by Marc Levinson in The Great A&P and the Struggle for Small Business in America. Half history, half economics lesson, the book serves as a useful reminder of the economic power of “creative destruction,” the occasionally ignored fact that capitalism and competition don’t always go hand in hand, and the complexity behind our often simplistic image of “mom and pop” operations and their giant nemeses.
Originally called the Great American Tea Company, A&P was the creation of George Gilman, an ambitious Manhattan merchant with a knack for flamboyant promotion. Gilman’s promotional stunts—they included enticing customers by placing an aromatic coffee roaster at the busy intersection of Broadway and Bleecker—and the-then novel concept of branding products and extending inventory beyond tea and coffee distinguished the company from its countless competitors after the Civil War. At Gilman’s side while business blossomed was George H. Hartford, a bookkeeper and junior partner before taking control of the company, now named the Great Atlantic & Pacific Tea Company, in 1878. Hartford passed the company on to his sons George L. and John in 1917.
Under the leadership of the younger Hartfords, A&P matured into America’s mightiest retailer. The duo—John served as the flashy promoter, George as the taciturn accountant—institutionalized practices commonplace today. They used size to win discounts from suppliers, kept prices low to increase sales volume, and cut out middlemen. The Hartfords turned the humble tea company into a powerhouse national grocery chain that sold a vast array of inexpensive products—meat, dairy, fresh produce, and baked goods—taken for granted today, but which were then rarely available in one location. The firm’s high-volume, low-price strategy, coupled with rigorous bookkeeping and aggressive but thrifty expansion—the Hartfords refused to rent space long-term for their stores, lest a franchise flop—plus a new emphasis on in-store aesthetics turned the company, in Levinson’s words, into a “profit machine.” In the process, A&P threatened smaller, independent grocery stores, which could not keep up.