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

[#1]

"Big Business Now Sweeps Retail Trade," declared The New York Times in 1928. "Huge Corporations, Serving the Nation Through Country-Wide Chains, Are Displacing the Neighborhood Store." While some version of that headline wouldn't be out of place in a present-day report about Walmart, the chain that provoked the most anxiety almost a century ago was the Great Atlantic & Pacific Tea Company, which in 1920 began a forty-three-year run as the largest retailer in the world, transforming the retail industry in ways that made Walmart possible.



In his eye-opening book The Great A&P and the Struggle for Small Business in America, Marc Levinson covers the history of A&P, the industry it revolutionized, and the enmity it inspired, in everyone from the mom-and-pop shopkeepers it put out of business to the government trustbusters who for years made the company the target of federal investigation. He also explores the deeper unease underlying the dominance of A&P, as the growth of chains and the modernization of grocery trade seemed to threaten the very existence of small-town life. 



Levinson, whose previous books include The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, notes that technical advances -- ranging from the cardboard box and the tin can in the late 1900s to the refrigerator and the automobile in the first half of the twentieth century -- reshaped the retail food industry. But his primary focus is on the innovations that A&P either created or, more often, exploited to great effect. Led for decades by the brothers George L. Hartford and John A. Hartford, paternalistic bosses known throughout the company as Mr. George and Mr. John, A&P mastered vertical integration: the company manufactured items like bread, coffee, and milk for itself, thus eliminating reliance on the wholesalers, brokers, and other middlemen who played major roles in the country's inefficient, archaic system of moving food from producer to consumer.

Where the company did order from manufacturers, it demanded special terms, including deep volume discounts. But the corporation's "radically new model," according to Levinson, was its high-volume, low-price strategy, which saw A&P slashing prices in order to get more shoppers through its doors. The strategy worked, and throughout the 1920s A&P opened discount stores so rapidly, John Hartford joked that "hobos hopping off the trains got hired as managers." There was no way for mom and pop to compete.



Levinson bookends The Great A&P with a discussion of creative destruction, "the painful process by which innovation and technological advance make an industry more efficient while leaving older, less adaptable businesses by the wayside." As A&P inflicted creative destruction on the grocery trade, government intervened, with many states passing punitive taxes on chains and, in 1949, the Department of Justice finally winning criminal convictions against the Hartfords for engaging in restraint of trade. Levinson offers too much arcane detail about the antitrust suit, particularly considering that it wasn't the government that finally brought A&P down. The extremely disciplined and visionary Hartford brothers, who had inherited A&P from their father, were childless, and they failed to cultivate outside successors; when they died in the 1950s, the company, unable to adapt to the shift of supermarket shopping to suburbia, quickly lost its way. "The speed of A&P's decline was shocking," Levinson writes. The company that had for so long been an agent of creative destruction at last became its victim.