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

My rating: 4 of 5 stars


A pretty good book about one of the first true retail behemoths in the United States, the Great Atlantic & Pacific Tea Company. This book came to my attention when I read that Jeff Bezos had recommended it to his staff at Amazon.

I am (unfortunately) old enough to remember the A&P retail grocery stores. This book details the rise of the business, from a relatively small tea retailer to the gigantic retail operation it became. Before the retailer began using its size to squeeze massive efficiencies out of the operation the author gives us a look at how clever marketing by the company founder managed to create an illusion of differentiation in tea. The Hartford brothers took control of the firm, and built it into a juggernaut. The American business landscape for the sale of groceries essentially consisted of mom and pop small retailers across the country, locally owned and run. A&P most certainly, as it grew, totally disrupted that model. The book shows us the backlash against A&P that grew into a mini-political movement, with laws passed that attempted to hinder the ability of A&P to use its size to squeeze out better pricing from its vendors. That battle is covered extensively. They squeezed so hard that they became the largest retailer in the United States.

“Rather than being accused of acting like monopolists to keep prices artificially high,
the Hartfords were found to have done the opposite. They and their company, Lindley declared, had acted illegally in restraint of trade by using A&P’s size and market power to keep prices artificially low.”

Levinson, Marc. The Great A&P and the Struggle for Small Business in America (p. 2). Amazon Digital Services LLC; 2nd edition (December 16, 2019). Kindle Edition.

The changing landscape for food retailing put mom and pop stores at a severe disadvantage, and with the A&P using those economies of scale to reduce prices and exact big savings from wholesalers it was only a matter of time before the old system would be replaced by a newer, more efficient way of doing business. “Creative destruction” entered the business vocabulary.

“A contemporary of the Hartfords, the economist Joseph Schumpeter, coined the phrase “creative destruction” in 1942 to describe the painful process by which innovation and technological advance make an industry more efficient while leaving older, less adaptable businesses by the wayside.”

Levinson, Marc. The Great A&P and the Struggle for Small Business in America (p. 7). Amazon Digital Services LLC; 2nd edition (December 16, 2019). Kindle Edition.

The Great A&P revolutionized business, and the methods they used would be further refined by business moguls yet to come.

“In the first half of the twentieth century, the Hartfords turned their company into one of the greatest agents of creative destruction in the United States. Although shifts in the way the world buys food are far less heralded than innovations such as cars and computers, few economic changes have mattered more to the average family. Thanks to the management techniques the Great A&P brought into widespread use, food shopping, once a heavy burden, became a minor concern for all but the poorest households as grocery operators increased productivity and squeezed out costs. The proportion of workers involved in selling groceries plummeted, freeing up labor to help the economy grow. And the company’s innovations are still evident in the supply chains that link the business world together. Although the Hartfords died decades before the invention of supercenters and hypermarkets, they employed many of the strategies—fighting unions, demanding lower prices from suppliers, cutting out middlemen, slashing inventories, lowering prices to build volume, using volume to gain yet more economies of scale—that Walmart’s founder, Sam Walton, would later make famous.”

Levinson, Marc. The Great A&P and the Struggle for Small Business in America (pp. 8-9). Amazon Digital Services LLC; 2nd edition (December 16, 2019). Kindle Edition.

The political battles that engulfed A&P as it rose, as mentioned above, had to do with the grocers determination to lower costs and then prices. The essence of the argument against them was that they had an unfair advantage and should be forced to maintain higher prices, with much legislative action undertaken to try to force that result. A&P struggled at times with the onslaught against it, but the attempt to stave off this creative destruction was doomed to failure. They brought not only lower pricing but convenience, consumer packaging, and a host of other new concepts to grocery shopping that crushed the opposition.

Bezos, as I understand it, thought the book important not because of the lessons learned about business from the rise of A&P, but from its ultimate destruction. The Hartford brothers devoted their lives to the business, both building it, then maintaining it, through a core set of business principles. While they were alive the business thrived. After the deaths of the brothers the new management team simply failed to adapt to a changing climate in grocery retailing. The A&P, which had led the way in change and innovation, became the old and inflexible under the successor management. The creative destruction they had brought to grocery retailing ended up destroying the Great Atlantic and Pacific Tea Company. It is a lesson that Bezos wants his folks at Amazon to understand and appreciate. The business titan of today can be the business failure of tomorrow, and “creative destruction” can claim any business that loses its focus. A great business (history) book for those that might be interested in that subject matter.

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