The Great Atlantic & Pacific Tea Company - Essay Example

Great A&P Modern grocery shopping is usually characterized by a readily available variety of goods, items ranging from the fat-free to the organically grown, with an abundance of different pricing points. However, things were not always this way. In the early 19th century, “BOGOs” and “2 for 1” sales had yet to be invented. Customers were allowed to purchase the goods that were in stock for whatever price was determined by the store owner and they were happy to be given this opportunity. The Great Atlantic & Pacific Tea Company was not the first chain retail store, nor did it invent the concept of the supermarket. A&P did not develop any new business strategies nor did they employ a single technique that hadn’t been used previously by others in some form or fashion. They were, however, able to find wild success in the transformation of the process and efficiency of food distribution in Depression-era America and afterwards. The changes A&P subsequently made to our food distribution system set the stage for it to become the largest retailer in the world between the years of 1915 and 1960. A&P recognized that the nation’s reliance on small, independent grocers was not effective since it was primarily based off high price margins and low volumes of stock. Consumers did indeed benefit from the changes A&P integrated into the modern shopping experience, but heated debate did ignite among small business owners and politicians the country over. It would seem that the Great A&P itself had undercut local, independent butchers, bakers, and candlestick makers in order to unite and profit from the retail conglomerate that it had envisioned. Although A&P didn’t actually cause these problems, it certainly took the heat for them, and Levinson does an ample job of illustrating how A&P’s triumphs put the organization center stage over the possibilities of corporate monopolization meant for the livelihood of small business owners nationwide. George Gilman, in the 1860s in New York City, differentiated his leather goods business into beverage and tea sales. His tea business thrived mostly due to the hiring of a manager named George Hartford, whose skills and attention to detail were well suited to compliment Gilman’s own work ethic. In 1878 Gilman made Hartford a partner in the company and profits touched one million dollars. Hartford’s sons eventually entered the business and the brothers would contribute immensely to A&P’s prowess and success in the grocery game. The two brothers, George and John Hartford, utilized the market power of the A&P to lower prices and increase production. Using a vigilant management style and no-frills approach, it was assumed by many that the Hartford’s were able to attain such success by undercutting the competition. But by the time the A&P had established over a thousand more locations, it was apparent that a significant benefit to the customer was being offered through the practice of integrating the manufacturing process into the folds of the company to achieve lower prices on the shelves, a technique that until now had only been accessible to wholesalers. Other such game-changers such as on-site box and bag recycling and the development of the economy store in 1912 allowed A&P to solidly establish itself as head of the low-cost grocery trade. The idea behind the economy store was that even low yield grocery locations that had only fifty or so customers could still turn a profit if they employed a high volume/low margin technique. A&P implemented these bare-bones stores in a manner that proved to be very lucrative in that these easily established stores bolstered A&P’s success to over 1000 stores by 1915, only then to double that number a mere 2 years later. It was this kind of success that drew the eye of the government, whom in turn created the Federal Trade Commission to keep an eye on those choosing to conduct business within the United States. Smaller retail stores and wholesalers found themselves uniquely vulnerable at this time, and would spend the next two decades attempting to disavow the A&P in judicial court and in congress. Eventually, anti-chain store laws first began to crop up at the state, and later federal, levels around the 1930s. Levinson moves to show his personal approval of A&P’s business techniques, but he also makes sure to spend a significant amount of time defining the economic devastation that resulted from these practices. These small business “mom and pop” grocery stores were not able to compete with A&P’s low prices and varied selection, despite the fact that retail shopping at this time in history involved establishing personal relationships between both patrons and wholesalers. Interestingly, and despite a relatively low profit margin for the business owner, at the end of the day it seemed that a sense of independence was gained by small business in lieu of those lost profits. By the mid-1900s, Levinson reports, political tactics had not had the influence on A&P’s growth that instigators had hoped they would. When the great A&P finally began to deteriorate in the 1950s it was largely due to tactical faltering on the business side of the organization after the deaths of its visionaries rather than any effects felt from federal anti-chain store policies. Overall, it can be said that, in the case of the Great A&P, there is the issue of economics, of the environment, but also of the romanticism of small business. The idea of small business, of locally owned merchants providing goods or services at the individual level, is appealing. At least until you understand that the goal of these merchants is still, and always will be, to sell those same goods and services at a higher price. One of the most unrecognized achievements of the last century is without a doubt the change to the industry that A&P effectively engineered. In the early part of the last century, families could expect to devote roughly a third of their household income toward the grocery bill, due simply to the inadequacy of the commercial retail system. The ability of consumers to purchase widely distributed foods at an affordable, even low, price point is of massive importance and something that must not be forgotten. Read More