The Great Atlantic & Pacific Tea Company | Wikipedia audio article

The Great Atlantic & Pacific Tea Company,
better known as A&P, was an American chain of grocery stores that ceased supermarket
operations in November 2015, after 156 years in business. From 1915 through 1975, A&P was the largest
grocery retailer in the United States (and until 1965, the largest U.S. retailer of any
kind). A&P was considered an American icon that,
according to The Wall Street Journal, “was as well known as McDonald’s or Google is today”,
and was “the Walmart before Walmart”. Known for innovation, A&P and the supermarkets
that followed its lead significantly improved nutritional habits by making available a vast
assortment of food products at much lower costs. Until 1982, A&P also was a large food manufacturer. In his 1952 book, American Capitalism, John
Kenneth Galbraith cited A&P’s manufacturing strategy as a classic example of countervailing
power that was a welcome alternative to state price controls.Founded in 1859 by George Gilman
as “Gilman & Company”, within a few years the firm opened a small chain of retail tea
and coffee stores in New York City, and operated a national mail order business. The firm grew to 70 stores by 1878, when Gilman
passed management to George Huntington Hartford, who turned A&P into the country’s first grocery
chain. In 1900, it operated almost 200 stores. After Hartford acquired ownership, A&P grew
dramatically by introducing the economy store concept in 1912, growing to 1,600 stores in
1915. After World War I, it added stores that offered
meat and produce, while expanding manufacturing. In 1930, A&P, now the world’s largest retailer,
reached $2.9 billion in sales with 16,000 stores. In 1936, it adopted the self-serve supermarket
concept and opened 4,000 larger stores (while phasing out many of its smaller units) by
1950.A&P’s decline began in the early 1950s, when it failed to keep pace with competitors
that opened larger supermarkets with more modern features demanded by customers. By the 1970s, A&P stores were outdated, and
its efforts to combat high operating costs resulted in poor customer service. In 1975, it hired outside management, closed
older stores, and built modern ones. When these efforts failed to turn A&P around,
the heirs of the Hartford family and the Hartford foundation, which owned a majority of the
stock, sold to the Tengelmann Group of Germany. In 1981, A&P launched its second store-closing
program financed by the surplus assets of its employee pension plan, reducing the corporation
to fewer than 1,000 stores. The plan also closed manufacturing operations
except coffee production.Starting in 1982, A&P acquired several chains that continued
to be operated under their own names, rather than being converted to A&P. While A&P regained profitability in the 1980s,
in 2002 it operated at a record loss because of new competition, especially from Walmart. A&P closed more stores, which included the
sale of its large Canadian division. A&P also spun off Eight O’Clock Coffee, the
last of its manufacturing units.In 2007, A&P purchased Pathmark, one of its biggest rivals,
and A&P again became the largest supermarket operator in the New York City area. At the same time, Tengelmann reduced its shares
to 38.5%, while the private equity firm Yucaipa, as major shareholder of Pathmark, acquired
27.5% of A&P’s shares. Highly leveraged after the Pathmark acquisition,
A&P experienced financial difficulties because of the Great Recession and filed for Chapter
11 protection in 2010, in the United States Bankruptcy Court in White Plains, New York. By the time of its filing, A&P had declined
from the nation’s largest grocery retailer to the 28th, with operations limited to the
Northeast.In 2012, A&P emerged from bankruptcy by becoming a private company, as Tengelmann
ended its holding, and briefly returned to modest profitability in 2013 and 2014. A&P had been for sale in 2013 but could not
find a suitable buyer. After declaring a loss in April 2015, it filed
for its second Chapter 11 bankruptcy on July 19 of that year. All of its supermarkets were sold or closed
by December 1, 2015, and the closure of the Best Cellars Wines and Spirits stores followed
shortly thereafter, with those stores auctioned in August 2016.==History=====1859–1878: Gilman era===
The forerunner of A&P was founded in the 1850s as Gilman & Company by George Gilman (1826–1901)
to continue his father’s leather tanning business; in 1858 the firm’s address was 98 Gold Street
in Manhattan. Gilman’s father died in 1859, leaving the
son wealthy. That year, Gilman & Company entered the tea
and coffee business from that storefront. One source speculates that Gilman decided
to enter a more respectable business in light of his wealth. In May 1861, Gilman turned over the tanning
business to his brother Winthrop; George moved his tea business to 129 Front Street. Initially, Gilman & Company was a wholesaler. In early 1863 the firm became a retailer,
Great American Tea Company. Quickly, it opened five stores, moving its
office and warehouse to 51 Vesey Street.Gilman proved to be a master at promotion; the business
quickly expanded by advertising low prices. The firm was able to offer low prices by acting
as both the wholesaler and retailer. Gilman also built a nationwide mail order
business. By 1866, the firm was valued at more than
$1 million. In 1869, the transcontinental railroad was
completed; Gilman created a parallel company, the Great Atlantic & Pacific Tea Company,
to promote the then-new concept of prepackaged tea under the Thea-Nector name. The tea company continued to use the Great
American name for mail-order purposes. In 1871, A&P introduced another concept when
it offered premiums, such as lithographs, china, and glassware with the purchase of
coffee and/or tea at its stores. These premiums are now collectibles.===1878–1951: Hartford era=======Evolution of the grocery store====George Huntington Hartford joined Gilman & Company
as a clerk perhaps in the late 1850s; Hartford later was promoted to bookkeeper, then cashier,
in 1866. By 1871 Hartford was in a position of authority
and was responsible for expanding A&P to Chicago after its great fire. A&P’s first store outside New York City was
opened just days after the disaster. The firm rapidly expanded; in 1875 A&P had
stores in 16 cities. In 1878, Gilman left the active management
of the firm to Hartford. By then, the firm operated 70 lavishly-equipped
stores and a mail order business with combined annual sales of $1 million. To raise revenue, Congress significantly raised
tariffs on tea and coffee. Profits on these products declined; around
1880 A&P started to sell sugar in its stores. The company continued aggressive growth and
by 1884 operated stores as far west as Kansas City and as far south as Atlanta. The company also operated wagon routes to
serve rural customers. About this time, two of Hartford’s sons, George
(1864–1957) and John (1872–1951), joined the firm. A&P lore holds that George convinced his father
to expand the product line to include A&P-branded baking powder. Over the next decade, the company added other
A&P-branded products, such as condensed milk, spices, and butter. As it expanded its offerings, the tea company
was gradually creating the first grocery chain. By 1900, the firm had sales of $5 million
from 198 stores as well as its mail order and wagon route operations. However, other grocery chains were expanding
more rapidly and blanketing their respective areas while the tea company’s stores were
spread over a much larger area. A&P quickly found itself at a disadvantage. In 1901, George Gilman died without a will,
starting a legal battle among his numerous heirs. The senior Hartford stepped into the battle
by asserting that, in 1878, Gilman gave him half of the company in an unwritten partnership
agreement. Evidence provided to the court established
that Hartford received half of A&P’s profits starting in 1878 and that the company’s leases
were in his name. The heirs realized that without Hartford,
the firm would quickly become unprofitable. Therefore, in 1902 they agreed to a settlement
where A&P was to be incorporated, with $2.1 million in assets. Under this agreement, the Gilman heirs received
$1,250,000 in preferred shares at 6% interest, while Hartford received $700,000 in common
stock and the remainder of the preferred shares. This gave Hartford control of the voting stock. Over several years, Hartford was able to repurchase
the preferred shares from the Gilman heirs. A&P opened an average of one store every three
weeks. A nine-story headquarters and warehouse was
built in Jersey City; it later expanded to include a manufacturing plant and bakery.By
1908, George Hartford Sr. divided management responsibilities among his sons, with George
Jr. controlling finance with John directing sales and operations. The sons ran A&P for over 40 years. The younger Hartford moved aggressively to
promote the A&P brand, dramatically increasing the product line. To make space for the new items, A&P replaced
in-store premiums with S&H Green Stamps. By 1912, the corporation operated 400 stores
and averaged a 22% gross margin, resulting in a 2% profit. A&P’s peddlers were also operating 5,000 rural
routes in distinctive red-and-black wagons.====Development of economy stores====
Food prices were a political issue in the 1912 presidential election after a 35% increase
in 10 years. To counter this trend, some chains experimented
with a no-frills format. After long debate, the Hartfords agreed to
John’s proposal of experimenting with an economy store
designed to operate at a 12% gross margin. Capitalized at only $3,000 including its initial
inventory, the prototype economy store operated with only a manager, and without fancy fixtures. Within two months, weekly sales increased
to $800 and the store achieved a 30% annual return on investment. A&P quickly expanded the concept; by 1915
the chain operated 1,600 stores. A&P’s tremendous growth created problems with
suppliers. Cream of Wheat was the largest breakfast food
manufacturer; it demanded that all retailers adhere to the cereal’s pricing per box. A&P purchased the product at wholesale, 11
cents per box (3 cents less), and decided that a 1-cent mark-up was appropriate for
its economy store format. Cream of Wheat cut off supplies and A&P sued. U.S. District Court Judge Charles Hough ruled
against A&P, saying that a manufacturer can establish retail prices. As a result, A&P and other large chains significantly
expanded manufacturing private brands.Hartford Sr. died in 1917; control of the company passed
into a trust with his sons George, Edward, and John as trustees in complete control.====Adding stores that included grocery,
meat, produce, and dairy====After World War I, A&P rapidly expanded; in
1925 it operated 13,961 stores. The newer combination stores included space
for meats, produce, and dairy, as well as traditional grocery items. Sales reached $400 million and profit was
$10 million. However, the Hartford brothers were concerned
that gross margins had reached 22% to cover higher costs and that the chain veered from
its low-cost discipline. In early 1926, the brothers discussed the
situation with division management and launched a program to lower prices and improve cost
controls. That year, sales increased 32%; A&P moved
its headquarters to the new Graybar Building adjacent to Grand Central Terminal. In 1927, A&P established a Canadian division;
by 1929 it operated 200 stores in Ontario and Quebec. In 1930, the corporation’s 16,000 stores reached
$2.9 billion in sales, resulting in a 25% grocery-store share in its operating areas,
and about 10% nationwide. No retail company had ever achieved these
results. A&P was twice as large as the next largest
retailer, Sears, and four times that of grocer Kroger. Unlike most of its competitors, A&P was in
excellent position to weather the Great Depression. The Hartfords built their chain without borrowing;
their low-price format resulted in even higher sales. From 1929 through 1932, A&P reported a record
$110 million in after-tax profits with each Hartford child earning over $5 million yearly
in dividends and equity.A&P’s success caused a backlash that threatened to destroy it. Thousands of mom-and-pop grocery stores could
not match A&P’s prices. While small operators had little political
clout, they were supplied by thousands of wholesale distributors which had considerable
political influence. Anti-chain store movements gained traction
in the 1920s, but became significantly stronger during the Depression. In 1935, Texas Congressman Wright Patman introduced
legislation that would have levied a federal tax on chain stores. If adopted, this legislation likely would
have ended A&P. While this legislation did not move in Congress,
in 1936 Patman sponsored the Robinson–Patman Act that outlawed charging different prices
to similar customers; this law passed. Patman then reintroduced his first bill. A&P retained a lobbyist and dropped its opposition
to unionizing activities of the politically powerful American Federation of Labor. George and John Hartford also took the unusual
step of publishing an open letter pointing out that the legislation would significantly
increase food prices. The tide of public opinion then turned against
the bill, which was defeated.====Converting to supermarkets====In 1930, the first supermarket opened in California. On the East Coast, Michael J. Cullen, a then-former
A&P employee, opened his first King Kullen supermarket in Jamaica, Queens. Two years later, Big Bear opened in Elizabeth,
New Jersey, and quickly equaled the sales of 100 A&Ps. In 1933, A&P’s sales dropped 19%, to $820
million, because of the competition. After considerable debate, the Hartford brothers
decided to open 100 supermarkets, the first of which was in Braddock, Pennsylvania. The new stores proved to be very successful;
in 1938, it operated 1,100 supermarkets. The chain continued to build supermarkets
and slowly phase out its smaller stores except in highly urbanized areas; in 1950, A&P operated
4,000 supermarkets and 500 smaller stores. Sales reached $3.2 billion with an after-tax
profit of $32 million.A&P’s success attracted the attention of President Franklin D. Roosevelt’s
anti-trust chief, Thurman W. Arnold, who was urged to investigate A&P by Congressman Patman. In late 1941, following Pearl Harbor, the
military placed many large businesses off-limits to the anti-trust division because of defense
priorities, leaving grocery stores as an option. The next year, A&P and its senior executives,
including the Hartford brothers, were criminally charged for restraint of trade in Dallas federal
court. However, in 1944, prosecutors withdrew the
complaint realizing that the Dallas federal judge thought the case was weak. The same day, charges were filed in Danville,
Illinois, and were assigned to Federal Judge Walter Lindley. The prosecution complained that A&P had an
unfair competitive advantage because its vertical integration including manufacturing, warehousing,
and retailing allowed it to charge lower prices. Prosecutors also complained that A&P refused
to buy from food retailers that insisted on selling through brokers or refused to give
A&P advertising allowances. The judges contended that if unchecked, A&P
would become a monopoly. A&P countered that its grocery-store share
was only about 15%, significantly less than the leaders in other industries. Judge Lindley agreed with the government,
fining each defendant $10,000.In 1949, the U.S. Court of Appeals upheld Lindley’s decision;
A&P decided not to appeal further. In September, the anti-trust division asked
the court to order the spin-off of A&P’s manufacturing operations and the break-up of A&P’s retail
operations into seven independent companies. Thousands of letters poured into the Justice
Department supporting A&P; the Hartford brothers gave extensive interviews with Time which
put them on the magazine’s November 13, 1950 cover. Time wrote that, next to General Motors, A&P
sold more goods than any other retailer in the world. John was quoted as saying, “I don’t know any
grocer who wants to stay small … I don’t see how any businessman can limit his growth
and stay healthy.” The case dragged on into the business-friendly
Eisenhower administration. In late 1953, the government agreed to drop
its demands to break up A&P if it shut down its produce brokerage that also supplied competitors.In
fighting the anti-trust suits, A&P also emphasized the considerable impact of its activities
on the public welfare, which had been recognized as the legacy of George Hartford Sr. and his
sons. The concepts pioneered and perfected by the
Hartfords and their competitors enabled the public to enjoy significantly healthier eating
at lower cost. In 1950, the average American consumed 10
percent more food than in 1930, with poorer households enjoying an especially important
improvement in the quality of the food they consumed. John Kenneth Galbraith supported this contention
in his 1952 book, American Capitalism, by citing A&P as an example of countervailing
power. To support his thesis, he discussed a 1937
A&P study of the feasibility of opening a plant to manufacture corn flakes. The mere possibility of A&P producing corn
flakes forced existing corn flake manufacturers to lower their prices by 10%.===1951–1974: Post-Hartford era===In 1951, John Hartford died in the Chrysler
Building after returning from a meeting of the automaker’s board of directors. George remained as A&P’s chairman and treasurer,
appointing the corporation’s longtime secretary Ralph Burger as its new president. While Burger started with A&P in 1910 as a
clerk in Glens Falls, New York, he was a staffer who lacked John Hartford’s strategic marketing
skills. Under Burger, A&P continued to report record
sales and operated with expenses of 12.6% of sales when the industry average was 15%. Burger was also President of the John A. Hartford
Foundation started by sons John and George in 1929, assuring Burger’s control of A&P
when George died in 1957. George’s trust was dissolved; the stock began
selling on the New York Stock Exchange (under the symbol GAP) at $59 per share. For the first time, A&P elected six outside
directors onto its board. In late 1961, A&P stock peaked at $70.The
seeds for A&P’s 35-year fall from the country’s largest grocery to bankruptcy (and later liquidation)
were planted in the 1950s: A&P was starved of capital. While A&P was publicly traded, control rested
with Burger, who headed both the corporation and the Hartford trust. Most of A&P’s profit was declared as dividends
to satisfy the income needs of the trust and its heirs. A&P also remained opposed to debt financing;
the only source of capital was the depreciation account. While competitors invested in larger, modern
supermarkets, A&P was slow to update its retail capital plant. By 1970, A&P stores were considerably smaller
and mostly older than those of its competitors. A&P placed too much emphasis on private label
products. In 1951, the Supreme Court ruled that manufacturers
could not establish minimum prices unless the retailer agreed to the arrangement. This decision launched a revolution in discount
retailing fueled by the rapid increase in television advertising that raised demand
for national brands. Contrary to this, A&P invested substantial
amounts of its scarce capital to expand manufacturing, including $25 million to construct the world’s
largest food plant in Horseheads, New York. Because A&P stores were smaller, its shelves
were dominated by private-label products, and customers found that national brands were
often out of stock. A&P’s labor costs were higher than those of
most competitors. Because A&P stopped growing, a rising percentage
of its workers were making higher wages due to their seniority. This was not a problem for most of A&P’s competitors
because they were rapidly expanding and had relatively fewer workers with high seniority. To offset higher labor costs, A&P tried to
operate stores with fewer employees, resulting in long lines at checkouts and empty shelves.Ralph
Burger attempted to reverse downward tonnage figures by reintroducing trading stamps, creating
A&P’s Plaid Stamps. However, by late 1962, the initial sales gains
evaporated and the six outside directors threatened to resign unless Burger retired. When Burger left in May 1963, the stock was
trading in the $30s. Burger was replaced with a succession of presidents
who were unable to stem the downward spiral. In 1971, the board turned to William J. Kane,
who joined A&P in 1934 as a full-time store clerk. Kane believed that A&P could be turned around
by focusing on basic store operations, including cleanliness, product availability, customer
service, and courtesy. When his program stalled, Kane implemented
a strategy to substantially cut prices by converting A&P to a warehouse store concept
that became known as W.E.O. Warehouse Economy Outlet (or Where Economy
Originates). The problem was that most A&Ps were not large
enough to properly implement the program; losses quickly mounted. In early 1973, the stock dropped to $17, and
Charles Bluhdorn of Gulf+Western made a tender offer at $20 per share. Kane rejected the offer, although some stockholders
thought that the offer was attractive considering A&P’s continuing difficulties. A&P exited California and Washington State
in 1971 and 1974, respectively, making Missouri its westernmost reach. In 1974, the corporation also left its long-time
headquarters in the Graybar Building, moving to Montvale, New Jersey.===1975–2001: Scott/Wood era===In February 1975, A&P considered a plan by
Booz Allen Hamilton to close 36% of its 3,468 stores. Kane agreed to resign and was replaced by
Jonathan Scott, the 44-year-old president of Albertsons. Under Scott, A&P closed 1,500 stores in three
years, reducing to 1,978 units. Scott hired numerous executives from outside
and pushed authority down to the regional level. During his first three years, A&P built 300
supermarkets ranging from 23,000 square feet (2,100 m2) to 32,000 square feet (3,000 m2),
along with its first combination grocery-drug stores with 40,000 square feet (3,700 m2)
under the Family Mart name. Scott continued Kane’s efforts to improve
basic store operations (including cleanliness and customer service) instituting a large
training program. Weekly per-store sales increased from $37,000
in 1974 to over $70,000 in 1976, with total sales increasing from $6.4 billion to $7.2
billion despite the closures. Manufacturing was also reorganized. While initial results were promising, by 1978,
A&P profits started to slide due to economic conditions caused by high inflation. With the share price down to $7, the John
A. Hartford Foundation finally came to the conclusion that it could no longer wait for
a turnaround. Erivan Haub, owner of the German Tengelmann
Group, expressed interest. Born in 1930, Haub studied retailing in the
U.S. after World War II and built his family’s grocery business into a 2,000-store chain
with annual sales of the equivalent of $2 billion. Although still having a home in Germany, his
children were born in the United States. Haub agreed to pay $7.375 per share for 42%
of A&P’s stock. Haub also quietly bought other shares until
he owned 50.3% in February 1981. Scott did not renew his five-year contract;
Haub hired James Wood to become chairman. Wood, an Englishman who was the same age as
Haub, previously ran the American Grand Union supermarket chain. Many executives recruited by Scott left A&P;
they were replaced by Wood’s associates from Grand Union. In Germany, Tengelmann had considerable success
with Plus stores; they were smaller units featuring low price private-label products
along with a limited assortment of meats and produce. A&P opened several divisions of Plus stores
in the U.S. to take advantage of A&P’s manufacturing plants and numerous small stores. However, the concept failed to win American
customers who were attracted to other chains offering low prices on national brands.James
Wood realized that another massive store-closing program was necessary to turn around A&P. In October 1981, it announced that it would
downsize to under 1,000 stores and close the Chicago division. Under the plan, A&P also closed its large
manufacturing group except the four coffee warehouses. To finance this program, A&P planned to terminate
its non-union pension plan, using its $200 million surplus. The plan’s obligations were covered by annuities
that cost only about $130 million because of the then high interest rates. A&P’s non-union employees were covered by
a defined contribution 401(k) plan. William Walsh, then a recently retired executive,
filed a class action that was ultimately settled by increasing the value of the annuities. A&P still realized over $200 million and was
not required to pay taxes because of tax losses carried forward from previous closing programs. The Philadelphia division also was to close,
unless the unions agreed to contract concessions. When the unions refused, A&P started implementing
the plan. The unions offered to purchase the stores,
but realized that they did not have the capital required. As an alternative, the unions agreed to a
profit-sharing arrangement if A&P formed a new subsidiary, and operated under a different
name. The new banner, “Super Fresh”, proved profitable. A&P realized that its name was not the asset
it had been. A&P started to acquire stores from other chains. In 1982, Stop & Shop exited New Jersey, not
returning for almost 20 years. A&P purchased most of these stores to replace
obsolete ones. In 1983, A&P bought Wisconsin-based Kohl’s
Food Stores (which had been part of the Kohl’s department store chain) from BATUS, enabling
A&P to reenter Wisconsin and Illinois. In 1984, A&P purchased Pantry Pride’s Richmond,
Virginia division. The next year, A&P reinforced its profitable
Canadian division by closing stores in Quebec, and acquiring Ontario’s Dominion Stores. In the U.S., A&P started construction of larger
40,000-square-foot (4,000 m2) supermarkets known as A&P Future Stores. In 1986, A&P purchased Waldbaum’s (with stores
in southern New York and southern New England) and The Food Emporium, the latter an upscale
New York City-based chain. In 1989, A&P acquired Michigan-based Farmer
Jack; also, A&P attempted to expand into Europe by bidding unsuccessfully for the Gateway
Corporation (then the United Kingdom’s third-largest grocery chain). At the end of the decade, A&P reported a profit
of 1.3% (compared to an industry average of 1.04%) on sales of $11 billion.In the early
1990s, A&P started to struggle again because of the economy and new competition, especially
Walmart. In 1992, A&P’s sales dropped to $1.1 billion;
it posted a loss of $189 million. A&P responded by strengthening its private
label program and overhauling its remaining U.S. units. Most stores smaller than 40,000 square feet
(4,000 m2) were expanded, closed, or replaced with units from 50,000 square feet (5,000
m2) to 80,000 square feet (7,000 m2). The new stores included pharmacies, larger
bakeries, and more general merchandise. A&P continued to suffer in the South and abandoned
most of the region by pulling out of Alabama, Florida, Georgia, Kentucky, the Carolinas,
Tennessee, and Virginia; most of these stores were sold to Kroger. As a result, A&P was reduced to four regions:
the Northeast, the Midwest (Michigan and Wisconsin), New Orleans, and Ontario. To reinforce the New Orleans division, A&P
purchased six Schwegmann supermarkets; however, A&P was now reduced to 600 stores. Christian W.E. Haub, the youngest son of Erivan, became co-CEO
in 1994 and CEO in 1997 when Wood retired from that post. In 2001, Wood also retired as Chairman, with
Haub assuming that title as well.===2001–2015: Final years as a supermarket
chain===Nationwide, Walmart gained a dominant position
in the grocery industry, forcing much of the competition to downsize, though in A&P’s core
Northeast region, Walmart still had not become a major grocery competitor. In 2003, after declaring its largest loss,
A&P closed Kohl’s Food Stores and A&P’s remaining stores in Vermont and New Hampshire, reducing
it to just over 500 stores. Also in 2003, A&P spun off the Eight O’Clock
Coffee division (its last manufacturing operation) to Gryphon Investors for $107 million. (In 2006, Gryphon sold Eight O’Clock Coffee
to Tata Global Beverages for $220 million). In 2005, A&P sold its 237-store Canadian division
(consisting of A&P, Dominion, and Food Basics units) to Montreal-based Metro Inc. for C$1.7
billion in cash plus shares of Metro. By 2009, the A&P name disappeared from these
stores. In 2007, A&P closed its New Orleans division,
limiting A&P’s footprint to the Northeast. Also in 2007, A&P acquired Pathmark, a long-time
Northeastern rival, for $1.4 billion. This allowed A&P to regain its position as
the largest grocery retailer in the New York City area, and the second-largest in the Philadelphia
area. However, the Federal Trade Commission declared
that as a result of the acquisition, A&P would be a monopoly in parts of Long Island and
Staten Island. As part of its settlement with the FTC, the
corporation was forced to divest of some Waldbaum’s and Pathmarks.When A&P marked its 150th anniversary
in 2009, it was ranked only No. 21 by Supermarket News of the top 75 North American grocery
retailers based on 2008 fiscal year estimated sales of US$9.6 billion. Tengelmann held approximately 38.5 percent
of A&P, with Yucaipa holding a 27.5 percent share; the rest was held by individual shareholders
and investor groups. Christian Haub was Chairman. Eric Claus, then President and CEO, left A&P,
with Sam Martin assuming these responsibilities.====First Chapter 11 bankruptcy (2010)====
The recession hit many supermarkets as customers migrated to discount markets in even greater
numbers. A&P was especially hard hit because of its
increased debt load to complete the Pathmark purchase. In June 2010, A&P stopped paying $150 million
in rent on the closed Farmer Jack stores. In August, A&P announced that it would close
another 25 stores in Connecticut, Maryland, New Jersey, New York, and Pennsylvania: 13
Pathmarks, 6 A&Ps, 2 Waldbaum’s, and 4 Super Fresh stores. In September, A&P announced it was selling
seven Connecticut stores to Big Y. On December 10, 2010, bankruptcy rumors surfaced;
A&P stock tumbled from over $3 per share to below $1 before trading was halted. Two days later, A&P announced it was filing
for Chapter 11 bankruptcy. According to documents submitted to U.S. Bankruptcy
Court in White Plains, New York, A&P listed over $2.5 billion in assets, and $3.2 billion
in debt.After the filing, A&P remained in operation (with its stock symbol changed to
GAPTQ) while it developed a reorganization plan. In November 2011, the corporation announced
that it had entered into an agreement to receive $490 million of debt and equity financing
from Yucaipa, Mount Kellett Capital Management, and investment funds managed by Goldman Sachs
Asset Management. The agreement enabled A&P to complete its
restructuring and emerge from Chapter 11 as a private entity in early 2012. At this time, Christian Haub left A&P, and
Tengelmann wrote off its books the remaining equity.====Second Chapter 11 bankruptcy and supermarket
shutdown====A&P briefly returned to modest profitability
by cutting costs in its remaining stores, although customer spending further decreased. In 2013, again a company, A&P was put up for
sale but could not find a suitable buyer. In January 2014, Sam Martin resigned. In March, Paul Hertz was named CEO and President
as the company broke even. On January 15, 2015, the trade publication
Supermarket News reported that A&P was still for sale. There were rumors of several parties being
interested, including Cerberus, still owning Albertsons assets; however, no suitable offers
were received. In May, rumors emerged that A&P was in more
financial trouble as it declared a huge loss (in April) for the previous year, losing more
business to better-managed competition. As customers were staying away, A&P considered
its second bankruptcy filing in less than five years. There were rumors that A&P would sell all
stores more than 40 miles from its corporate offices, shrinking the company to about 100
stores; other rumors were that the company would sell all its stores. Rumors also surfaced about a Chapter 7 bankruptcy
and total liquidation, selling the company in pieces, as well as a Chapter 11 bankruptcy
with selling in pieces. The company remained for sale as a whole,
receiving no bids for any of its stores. Other alternatives were explored, including
selling other assets.On July 19, 2015, A&P filed for Chapter 11 bankruptcy protection,
immediately closing 25 underperforming stores. The next day, A&P announced that 76 of its
stores (including Super Fresh and Pathmark units, as well as one Food Emporium unit)
had been sold to Albertsons (owner of Philadelphia-based Acme Markets). Stop & Shop purchased 25 units, mainly Pathmarks
in New York City; Nassau and Suffolk counties. The Key Food co-operative acquired 23 units,
mainly in New York City, including all remaining Food Basics and Food Emporium stores. Morton Williams acquired two Food Emporium
stores in Manhattan, while Wakefern Food Corporation, the cooperative which runs ShopRite and PriceRite,
acquired 12 units, including 9 Pathmark stores. Local grocers also acquired units either through
sales or auctions. All supermarkets were closed by November 25
(Thanksgiving eve). The last remaining portion of A&P, Best Cellars
at A&P, had its stores auctioned in summer 2016, with 11 stores sold (none as going concerns)
and 6 leases rejected.==Store design==The A&P Historical Society describes early
stores as “resplendent emporiums” painted in vermilion and equipped with a large gas
light T sign. Interiors included crystal chandeliers, tin
ceilings, and walls with gilt-edged Chinese panels. A clerk stood behind a long counter to serve
customers (self-service did not become common until the 1930s), and the cashier’s station
was shaped like a pagoda. When A&P started offering premiums, the wall
opposite the counter was equipped with large shelves to display the giveaways. After John Hartford became responsible for
marketing in the 1900s, A&P began offering S&H Green Stamps to free space for the expanded
line of groceries available in the stores. The economy stores John Hartford developed
in 1912 eliminated frills. Typically 600 square feet (56 m2), these stores
were equipped with basic shelving and a small ice box. A&P agreed only to short leases so that it
could quickly close unprofitable stores.In the early 1920s, A&P opened combination grocery/meat/produce
stores eventually converting into supermarkets in the 1930s. On average, each supermarket replaced six
older combination stores. A&P’s policy of agreeing only to short-term
leases resulted in differences in store design into the 1950s. During the mid-20th Century A&P stores were
considerably smaller in size than those of other chains. As late as 1971, half of the A&P stores were
under 8,000 square feet (740 m2).During the Scott era, store design was modernized and
controlled from headquarters. A&P developed four different-sized prototypes:
23,000 square feet (2,100 m2), 28,000 square feet (2,600 m2), 30,000 square feet (2,800
m2), and 32,000 square feet (3,000 m2). Family Mart stores were combination grocery/drug
units with 40,000 square feet (3,700 m2) of floor space.===Futurestore===
During the Wood era, A&P developed the “Futurestore” concept; these supermarkets used black-and-white
decor. Family Mart would serve as the testbed for
the concept design.Futurestore was one of two concepts A&P launched during the 1980s
(the other being Sav-A-Center; also defunct). Futurestore’s first supermarket was in the
New Orleans area in 1984, where A&P converted two Kroger stores it had acquired. The first conversion of an A&P to the Futurestore
format was in New Jersey in 1985.The Futurestore concept spread to A&Ps in the southeastern
US, plus its traditional Mid-Atlantic region (operating in the Philadelphia area under
the Super Fresh name), but, in the late 1980s, all Futurestores had been re-branded, or closed. Like its sibling supermarket, Sav-A-Center,
A&P Futurestore was identified by its features and color scheme. The Futurestore interior was black and white,
compared to the green and white of Sav-A-Center stores. Most Futurestores also had a glass atrium
storefront. In addition, Futurestore signage featured
pictograms, similar to those of European supermarkets. Futurestores typically offered the latest
in gourmet departments and electronic services in exclusive neighborhoods. Futurestore’s amenities were more gourmet-
and specialty-oriented than found at a traditional A&P or Sav-A-Center supermarket. Futurestores also had more modern fixtures
and machinery than A&Ps had at the time. Since the concept was never adopted for a
widespread rollout, A&P phased out the Futurestore nameplate, closing some stores and converting
others to A&P or Sav-A-Center. Many customers felt Futurestore did not have
the same panache of other upscale food retailers, which not only offered more gourmet products,
but also cooked and delivered it. A&P, however, did not immediately change the
interior of the Futurestores, unlike its Sav-A-Centers, after A&P began to rebrand them as A&P Food
Markets in the 1990s.===Pharmacies===
In the mid-1990s, A&P began adding pharmacies, concentrating on building units of 45,000
square feet (4,200 m2) to 65,000 square feet (6,000 m2).===Overseas ventures===
In the early 1980s there was discussion for A&P to open a store in Saudi Arabia. due to the booming oil industry at the time. A&P Preservation reported in March 2018 that
A&P did open a store in Saudi Arabia, in Riyadh. Tenglemann Representative Petra Czech says
that the name was licensed to Saudi operators. The store was most likely converted to the
Saudi rendition of Safeway.==Store names==For most of its history, A&P operated its
stores under that name. That changed during the Scott and Wood eras
when A&P created chains, or used the original names of acquired chains. The following were A&P’s significant retail
operations under a different name: Family Mart: Started in 1977, this chain of
large grocery stores/pharmacies was based on similar units built by Skaggs-Albertson’s
when A&P Chairman Scott worked for the latter. Initially successful, within 10 years Family
Mart opened 28 units in Alabama, Florida, Georgia, and the Carolinas. The 18 Family Marts in Florida were sold in
1987 and the remaining Family Marts were closed by 1999. Plus: In Germany, Tengelmann operated many
small stores under the Plus name, focusing on low-cost no-frills operations. After acquiring a majority stake of A&P, Tengelmann
converted some of A&P’s smaller stores to the Plus concept. Super Fresh: When A&P announced the closure
of its Philadelphia division (which included Delaware and southern New Jersey) during the
1981–82 restructuring, the unions offered to buy many of these stores. A&P agreed; the corporation and the unions
settled on a new labor agreement that included a profit-sharing provision. The agreement also called for the stores to
be operated under a new name, Super Fresh. These stores proved to be profitable, and
in 1986 the name was extended to supermarkets in Maryland, the District of Columbia, and
Virginia; the latter included Richmond-area Pantry Pride stores A&P purchased in 1981. Super Fresh stores were still in operation
when A&P began liquidation. In the subsequent auction, Super Fresh brand
was acquired by Key Food and later re-launched, primarily in and around Newark, New Jersey
rather than its original Philadelphia footprint. Food Basics (US & CA): In the early 2000s
when the recession was hitting formerly prominent middle class areas, A&P had recorded record
losses for stores in New Jersey suburbs such as Paterson, North Bergen, and Glassboro. A&P quickly turned around these unprofitable
stores into a no-frills supermarket, called Food Basics. It offered the bare staples in the grocery
department at a lower price. The stores featured both the America’s Choice
and Food Basics storebrands, as well as the normal name brand items other A&P-owned stores
sold. By 2010, Food Basics operated more than a
dozen stores in lower-class New Jersey cities, and several Super Fresh-turned-Food Basics
stores in Central Philadelphia. The stores had no service departments except
for a service deli. All other meats, seafood, and baked goods
were produced off-premises, which cut A&P’s labor costs in these stores by more than 50%,
by taking out the higher-paying jobs of a butcher and baker, and replacing them with
more stock clerks and cashiers. Kohl’s Food Stores: A&P acquired the Wisconsin-based
Kohl’s Food Stores in 1983 after closing A&P’s large Chicago division in 1982. The first Kohl’s opened in 1946; during the
1960s it expanded into department stores. In 1972, Kohl’s was purchased by British American
Tobacco, which decided to spin off the grocery stores to A&P a decade later. A&P closed Kohl’s Food Stores in 2003. Dominion (Canada): In 1985, A&P acquired the
Dominion chain in Canada, consisting of 92 supermarkets, 2 warehouses, and an office
complex. Dominion was sold in 2005. Ultra Food & Drug / Miracle Mart / The Barn
Markets (Canada): A&P acquired these two supermarket chains in Canada, and operated them until
the chain’s demise in the early 2000s, and operated out of the same store styles of its
counterparts. The Food Emporium: Also in 1985, this 26-store
New York City-based chain was acquired by A&P. Founded in 1919 as Daitch Crystal Dairies
(later becoming Shopwell Supermarkets), the chain peaked at 103 stores in 1962. In the late 1970s and early 1980s, Shopwell
closed many of its stores and changed its name to The Food Emporium to focus on affluent
areas. Food Emporium stores were still in operation
through A&P’s liquidation; Key Food acquired The Food Emporium and four stores, along with
the Super Fresh brand, in the liquidation, maintaining use of the brands today. Waldbaum’s was acquired in 1986. The New York City-based chain was founded
in 1904 and opened its first supermarket in 1951. The company quickly expanded from the city
into Nassau and Suffolk counties, and later into Connecticut and Massachusetts. In the early 2000s, A&P operated 80 Waldbaum’s
in southernmost New York state (outside Manhattan). Many Waldbaum’s were still in operation when
the company started liquidation, mainly in the Long Island area. Farmer Jack was a 79-store supermarket chain
based in Detroit; it was purchased by A&P in 1989. Farmer Jack started in 1924; in the mid-1950s
its name was changed to Borman’s. These stores were renamed Farmer Jack in the
late 1960s. In 1987, Farmer Jack was depleted of cash
in a lengthy strike; it was sold in 1989 to A&P for $76 million. Within five years, all A&Ps in the Detroit
area were converted to Farmer Jack, as were some A&Ps in Virginia and South Carolina. By 2007, all Farmer Jack stores were sold
or closed. Sav-A-Center:The Sav-A-Center name was first
used for a chain of 20 supermarkets in the greater New Orleans, Louisiana, area. The division operated throughout Louisiana,
and had two stores in Mississippi. In addition, the Sav-A-Center division included
three regular A&P stores, one of which was a small “corner grocery” in the French Quarter
of New Orleans that A&P had been operating since 1931. By August 2005, Sav-A-Center operated primarily
in the Baton Rouge and New Orleans metropolitan areas, and along the Mississippi Gulf Coast. Many stores sustained damage as a result of
Hurricane Katrina. Twenty-one stores reopened within a few months
of the storm; two others following remodeling to repair flood damage. Five stores were closed permanently due to
severe damage to the stores and surrounding areas. In April 2007, the chain exited the Baton
Rouge area. On May 30, 2007, A&P confirmed that it was
planning to exit the New Orleans area, and was seeking buyers for its 20 remaining Sav-A-Center
stores. A&P said the company cited its decision to
focus on its remaining operations in the Northeast, where it operated the majority of its stores. It was announced in September 2007 that the
remaining Sav-A-Center stores would be sold to the locally owned Rouses chain. Rouses took over 16 Sav-A-Center stores, including
the Mississippi stores and the French Quarter A&P, sold one to competing chain Breaux Mart,
and closed the others. Pathmark was a large New York-area chain that
was one of A&P’s major competitors when it was acquired in 2007. Pathmark, originally known as Supermarkets
General, was formed in 1956 as a subgroup of the Wakefern co-operative known as ShopRite. When Supermarkets General broke from ShopRite
in 1968, it converted its 81 stores to Pathmark. By 1977, Pathmark started to build larger
stores with pharmacies. To overcome a hostile takeover in 1987, Pathmark’s
management instituted a leveraged buyout of $2.7 billion that committed it to make large
debt payments. In 2000, Pathmark entered bankruptcy; after
it was reorganized, Yucaipa Holding purchased 40% of Pathmark for $150 million. At the time of its 2007 purchase by A&P, Pathmark
operated 141 stores and had a capitalization of $634 million. Many Pathmark stores were still in operation
when A&P began liquidation. The brand has been sold to Foodtown, but is
not currently in use for stores.==Private brands==When A&P was founded, there were no branded
food products, and retailers sold food commodities in bulk. In 1870, the company became among the first
to sell a branded pre-packaged food product, introducing “Thea-Necter” brand tea. In 1885, the name “A&P” was introduced on
baking powder containers. Also in the 1880s, the company adopted the
name “Eight-O’Clock” for its coffee. When A&P moved its headquarters to Jersey
City, New Jersey in 1907, it included a bakery and coffee-roasting operation.A&P’s evolution
into one of the country’s largest food manufacturers was the result of the 1915 court decision
in the Cream of Wheat litigation that upheld the right of a manufacturer to set retail
prices. To keep prices down, A&P put emphasis on private
label goods. By 1962, A&P operated 67 plants before consolidating
many of them into the 1.5 million-square foot Horseheads facility, which was the largest
food manufacturing plant in the world under one roof. As late as 1977, private label represented
25% of A&P’s sales, with A&P manufactured products accounting for over 40% of this total. That year, A&P manufacturing reported sales
of $750 million from its 23 plants(which by itself would have ranked A&P’s manufacturing
group at about number 350 in the Fortune 500).Until the creation of a combined Manufacturing Group
in 1975, the corporation’s production operations were conducted by four separate divisions:
Bakery (Grandmother’s, Marvel, and Jane Parker): Until 1923, Jersey City was A&P’s only bakery. A&P rapidly expanded the division until it
was America’s largest baker, with 37 plants. By 1977, the number of bakeries was reduced
to seven; the division was closed during the 1981–82 restructuring. Coffee (Eight O’Clock, Bokar, Red Circle):
In 1919, A&P consolidated its coffee business into the “American Coffee Company”, building
roasting and grinding facilities. By 1977, A&P owned three coffee roasting plants,
and one for canned coffee. The coffee operation survived the 1981–82
restructuring, not sold until 2003. Dairy: This division dates to 1922 when A&P
purchased the White House Milk Company of West Bend, Wisconsin to produce evaporated
milk. At that time, grocers rarely sold fresh milk
because of the lack of refrigeration. By 1977, the division operated three dairies,
a cheese plant, and a dry milk plant. Grocery (Quaker Maid, Ann Page, Our Own Tea):
In 1907, A&P opened a vegetable cannery. After World War I, A&P took advantage of the
collapse of canned salmon prices to acquire canneries in Alaska. A&P then acquired facilities to produce a
wide range of canned goods, frozen foods, nuts, tea bags, pasta, peanut butter, detergents,
insecticides, gelatin, paper goods, and candy. A&P also operated a printing plant to produce
labels and packaging for the other facilities, and promotional material for the stores. By 1977, A&P operated the Horseheads plant,
plus six smaller facilities.In the mid-1990’s, A&P introduced a new simplified storebrand
called America’s Choice, which would last until the chain’s demise in 2015. (In Canada, the brand was called “Master Choice”. This same branding was used for A&P’s gourmet
items in its U.S. stores) In 2008 and 2009, the corporation added the
environmentally-sensitive Green Way brand, gourmet Food Emporium Trading Company brand,
and low-cost Food Basics alternative.==Woman’s Day==
What became Woman’s Day was started by A&P in 1931, as a free leaflet with menus. In 1937, it was expanded into a magazine that
was sold exclusively in A&P stores, for 5 cents. Circulation reached 3 million in 1944 and
4 million by 1958, when the magazine was sold to Fawcett Publications.==In arts, entertainment, and media==
From 1924 to 1936, A&P was the sponsor of the musical radio show The A&P Gypsies. A&P was also a long-time sponsor of Kate Smith’s
radio program; the popular singer became an A&P spokesperson, attending store openings
around the country. The store is the setting for John Updike’s
1961 short story, “A&P”. Born on 4th of July. Vietnam film featuring Tom Cruise, directed
by Oliver Stone. 1989.
A&P partnered with the Lifetime Network to produce the food-reality series Supermarket
Superstar in 2013. In the 2015 book Good to Great, A&P was one
of the companies examined against its rival Kroger. In 2017, the blog A&P Preservation arose to
preserve the chain’s history in photos and writing. They post regularly, three to four times a

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