A & P’s century of selling groceries is a remarkable story told well by Marc Levinson. Still if you were not the son of a grocer and had not once owned an independent book store, you would probably find getting through the book somewhat tedious.
The Great American Tea Company proliferated in the decade after the Civil War with stores mostly in the Eastern seaboard cities. The name change to the Atlantic and Pacific commemorated the completion of the transcontinental railway in 1869. In its early decades, A & P stores were small with many locations within a mile or two of each other in city neighborhoods.
Sixty years later there were around 16,000 stores throughout the country, with hundreds of factories and warehouses that supplied these stores. A & P was our largest retail chain followed by F.W. Woolworth, a poor second. The owners for most of its century of expansion were the brothers, George and John Hartford.
A & P did not create its own markets. For the most part, it replaced smaller chains and independent grocers. Levinson wants you to believe that this was largely the result of innovative retailing as well as having the cheapest prices in town. True, A & P advertised in local papers when that was unusual. And premiums kept their customers loyal, though they eventually handed that business over to S & H Green Stamps. (Remember licking stamps.)
Initially only selling tea and coffee, A & P gradually added lines. Baking powder, of all things, was one of the first. Sugar. Tinned or canned fruits and vegetables. Many of these items were marketed under their own brand. The big steps were adding meat and poultry, fresh produce, and their own bakery goods. In 1912 they introduced the “economy stores,” larger in size but with fewer employees per store. Customers served themselves.
True, A & P could promise a steady volume of purchases that allowed their suppliers to make better inventory decisions. But they also used their market power to force their suppliers to give them price breaks and various allowances that smaller operations could not get. That demand was backed up by the threat to stop doing business. They successfully intimidated the likes of the Morton Salt Company and the National Biscuit Company.
Less successful was their policy of vertical integration, buying directly from producers, and opening factories to supply their stores. Running food-processing plants, Levinson explains, was not their forte and they soon returned to being mostly a retail grocery chain.
There was a growing anti-chain sentiment around the country, articulated by the populist movement. Chain competition, these populists argued, was disrupting small-scale retailing and entrepreneurship. You could preserve a competitive market with numerous firms as a means of ensuring that consumers got the best deals. Or you could allow competition to drive out the less efficient firms that couldn’t offer cheap prices thus producing the most “rational organization” in retailing.
Levinson tends to favor the latter model, but the critics of chain stores argued that keeping as many players in the field by keeping the field level was the best way of securing competition. This was the thrust of the argument for anti-chain legislation passed in 1929, the Robinson-Patman Act.
Wright Patman, a congressman from East Texas, was a dogged foe of the chains. Patman hoped to make illegal such practices as providing advertising and placement allowances that were only available to retailers doing a substantial level of business. He and the anti-trust division of the Federal Trade Commission believed that the favorable treatment of A & P and other chains by their supplies was coerced; suppliers were being forced to engage in anti-competitive behavior.
In the 1930s driving prices down often through anti-competitive practices ran counter to Depression-era efforts to keep prices from falling. Foes of the chains thus had an additional force behind their campaign. There were Congressional hearings in the 1930s, but war intervened and nothing was done until April 1945. A Supreme Court verdict in 1949 ordered the breakup of A & P.
The world war changed everything. The Roosevelt Administration was now working with big business to increase production to fight the war. Roosevelt himself had never been that enthusiastic about the Robinson-Patman activity anyway.
The post-war years were not good for A & P. They did not take part in the expansion of the chain grocery business into suburban malls. A & P insisted on signing only short term leases and the mall developers weren’t interested.
There were only niche markets left for independent grocers, like the R & T Store in Garwin, Iowa. The nearest A & P was seventeen miles distant.