Friday, November 13, 2009

The Legend of the Great A&P Tea Co.

The Great Atlantic & Pacific Tea Company is a New Jersey-based, and for the last thirty years, German-owned supermarket chain. As of today, according to their website, they operate 435 stores in six Northeast and Mid-Atlantic states (including a lone Washington, D.C. unit) under a number of different banners, including Super Fresh, Food Basics, The Food Emporium, Waldbaum’s, Pathmark and of course, A&P. The last couple of years have seen the company exit the Detroit and New Orleans markets, and after an 80-year presence there, the A&P banner is no longer to be found in Canada.

For many cities, the A&P story over the last several decades has been a sad one of retrenchment, and ultimately of disappearance. For those born in the last twenty years or so, unless they live in one of A&P’s current or recently vacated markets, chances are good they’ve only heard of A&P in passing - a brief mention in an American history class, perhaps, or a fond anecdote from an older relative.

It wasn’t always this way. As recently as the mid-1960’s, A&P was the largest retailer in America. Not just the largest supermarket chain – the largest retailer, period. Larger than Sears at the peak of its power. Larger than their nearest two competitors – Safeway and Kroger - combined. Responsible, to a great extent, for the very concept of the “chain store” itself. A part of daily life for Americans (and a fair amount of Canadians) from a multitude of communities, large and small.

The story of A&P begins in the mid-19th century, with two men, both named George, both natives of Maine, and both of whom eventually moved to New York to seek their fortunes. George Francis Gilman was born in Waterville, Maine, in 1826 to a prominent, wealthy family who owned a leather goods business. George Huntington Hartford, seven years younger than Gilman, was born in Augusta, to a farm family of far more modest means. Details on how the two men met are sketchy and somewhat contradictory in the various accounts I’ve read (not surprising given the event took place over 150 years ago, and the fact that stories like this tend to take on a mythical quality over time), but it is apparent that Hartford had worked for Gilman at a dry goods business some years prior to their arrival in New York - possibly in St. Louis. Hartford also lived and worked in Boston at one point as well.

By the 1850’s, Gilman had turned his sights from the family’s leather goods business to a new interest – the importing and brokerage of tea. Eventually, he asked Hartford to join him in the business, which consisted at first of a single delivery wagon. In 1859, their company was formally established as The Great American Tea Company. By this time, their roles were more or less set – Gilman was the financier and promoter. Hartford was the operator, though over time he would develop impressive skills as a promoter himself.

The first store was opened at 31 Vesey Street in New York City. The company’s early stores featured very ornate d├ęcor - vermilion red (sort of an orange-red) walls and gilt fixtures, oriental paintings and a plethora of ornamental gas lights. In 1869, Gilman and Hartford modified their company’s name in a tribute to the establishment of America’s first transcontinental railroad – the driving of the “golden spike” at Promontory Point, Utah, uniting the Central Pacific and Union Pacific railroads, east and west. Henceforth, the company would be known as “The Great Atlantic & Pacific Tea Company”. The new name, of course, was also a not-so-subtle indicator of the company’s aspirations.

In its earliest days, A&P employed a very different marketing approach from “the most good food for the least money” philosophy upon which their fame and fortune would later be built. Prior to 1912, the company relied on all manner of premiums and giveaways to stimulate sales. Millions of “trade cards”, essentially postcards with Victorian scenes of angels, children, pets, flowers and other idyllic subjects on the face and A&P advertising on the reverse were given out. In those modest times, the cards did much to endear A&P to their customers. A high percentage of them were saved for decades, displayed for decorative use in homes. Even today, 100 or more years later, A&P trade cards turn up frequently in antique malls or on Ebay.

In 1878, Gilman retired to enjoy the New York social whirl, turning the operation of the business over to Hartford, while retaining his half ownership stake as a silent partner. By this time, the company was growing at a nice clip - according to the Progressive Grocer book “A&P, Past, Present and Future”, by 1876, A&P’s domain extended as far east as St. Paul and by 1881 as far south as Norfolk and Richmond, Virginia.

One development of the 1880’s that was no doubt unheralded (and probably little noticed) at the time would have a profound effect on A&P’s destiny well into the next century - the entry of two of George Hartford’s sons into the business. Only teenagers at the time, the sons – George Ludlum Hartford and John Augustine Hartford - would become two of the most influential figures of all time in the grocery business, and are still regarded as such today. For over sixty years they would helm A&P. The brothers were polar opposites by nearly every measure – George, born in 1864, was the guardian of A&P’s finances. Short and somewhat rumpled in appearance, he settled in a New Jersey suburb, where he lived conservatively, and enjoyed simple hobbies. He disliked taking vacations. John, born in 1872, headed up A&P’s operations and marketing. A true visionary, John’s initiatives were the life force behind A&P’s phenomenal growth in the first half of the 20th century. Tall, dashing and always impeccably tailored, as an adult he lived in grand style in tony Valhalla, New York, a member of the top social echelon. Despite their vast differences and frequent disagreements, the brothers had an abiding personal regard for each other and a strong respect for the different roles they fulfilled for A&P. As young men, to avoid confusion with the elder Mr. Hartford, the brothers were given the nicknames “Mr. George” and “Mr. John”. Long after their father’s passing, indeed for the rest of their own lives, they were referred to within A&P circles as such.

In 1901, A&P co-founder George F. Gilman passed away. It was a sad occurrence, to be sure, but Gilman’s death also had an exasperating side effect. It came to light soon afterward that no contracts or agreements of any kind had ever been drawn up at the time of the company’s founding 40 years earlier. As a result, George Huntington Hartford had no documentation to confirm his ownership stake in the company – and no way to defend it from claims against the estate of Gilman, who had no children. After a harrowing four-year court battle, Hartford’s rights were established, although a big chunk of Gilman’s estate (largely composed of A&P stock, of course) was awarded to his longtime female companion, according to the book "The Rise and Decline of The Great Atlantic and Pacific Tea Company" By William I. Walsh. Hartford eventually bought her shares out, gaining complete control of A&P for his family.

By the dawn of the 20th century the younger Hartfords, George and John, were firmly in charge of the “Tea Company”, as insiders tended to call it, an empire that consisted of nearly 450 stores by 1912. Certainly A&P was prosperous, but John Hartford saw ominous warning signs for the future. The company’s growth had plateaued, despite the fact that A&P had begun to evolve into a true “grocery store” through the addition of hundreds of food items alongside their tea and coffee offerings. Prices and profit margins were high and the gaudy premiums were taking up half the shelf space in some locations, presumably leading Hartford to grow concerned that A&P was slowly becoming a pricey “boutique” operation, damaging its appeal to the average customer on a modest budget.

What John Hartford conceived as a solution to this dilemma – the “Economy Store”, as it was called, would not only launch A&P into the stratosphere and ultimately into legend, but also formed the basis of modern mass retailing – the “everyday low price” concept. Under Hartford’s new concept, the giveaways and premiums would become history. Profit margins would be cut to half the previous level. The fancy decor would be scrapped. The “vermilion red” walls would become simply red. (The color, not the band.)

Despite the initial objections of his brother and father, Hartford pressed on, wisely placating them by agreeing to move forward on a “test” basis, first with a single store in Jersey City, N.J., then on a larger basis with a few stores in one of the company’s New York City districts. The customer response was overwhelming, and within a couple of years, the Economy Store program was running full tilt. The traditional A&P stores began to close as the new Economy Stores opened. The Progressive Grocer book cites some impressive statistics – In 1915, 95 stores were opened in the Boston area alone. By February of that year, A&P had more than doubled in size to 938 stores, hitting the 2,000 store mark following year and 3,000 stores the year after that, 1917. Ten years later, in 1927, A&P could boast an astonishing 15,000 stores, all sporting A&P’s new slogan, “Where Economy Rules”, in a bar beneath the famous A&P “red circle” logo.

One particular group was less than thrilled with A&P’s new pricing policy. Some of A&P’s brand name suppliers, under pressure from other chains and thousands of independent grocers, were furious that the A&P Economy Stores were undercutting their suggested retail prices. Out of this morass came a famous lawsuit, filed by The Cream of Wheat Company, whose namesake product was heavily advertised nationally and was enormously popular in those days. Cream of Wheat had set a price of 14 cents per box at that time, which virtually all retailers, except A&P, honored. A&P cheerfully sold it for 12 cents a box, moving huge quantities. In 1915, Cream of Wheat filed suit against A&P to force them to stop the practice. A vigorous defense notwithstanding, A&P lost the case. The experience did much to convince A&P to invest heavily into manufacturing their own private label goods. By the end of the 1920’s, A&P was as formidable in food manufacturing as it was in retail, with factories strewn throughout the country, processing every type of food imaginable – even to the extent of operating their own fisheries and packing plants in Alaska.

In 1917, A&P’s other co-founder, George Huntington Hartford, passed away. Two years earlier, he had formed a trust that equally divided A&P ownership among his five children, but specifically placed all decision making authority with George and John.

Closing in on 14,000 stores in 1925, the task of running all aspects of the company from A&P’s headquarters was becoming unwieldy, to say the least. That year, the company shifted to a decentralized management structure which split their operating area into six regions, each with its own administrative offices and distribution centers.

When the depression hit in October 1929, A&P was in a far stronger position than most retailers. The “Economy Store” concept was a perfect fit for the times. Just two years previously, John Hartford had laid down the law to A&P’s command corps when he noticed that profit margins were starting to creep up again, past a level he considered acceptable. “The most good food for the least money” was the slogan, and would be the non-negotiable rule. Challenges would follow in the 1930’s, both from competition and from government, but for now A&P was standing strong.

The two photographs above, depicting a circa-1931 A&P store, are Property of the Holyoke Public Library History Room and Archive, and appear here by their kind courtesy. The Library’s collection, along that of several other Central and Western Massachusetts institutions can be viewed on the wonderful Digital Treasures website. Below is another A&P “Economy” storefront, from roughly the same time period, from a 1970 Progressive Grocer article. Last is a photo of a much earlier A&P store, typical of the ornate treatment (check out the sign lettering and the trellis work in the window) these stores received. Picture it in vermilion and gold. Thanks to Cynthia Closkey for the use of this great early photo. Her great-grandfather and his siblings, who operated the store, are featured in the photo.

14 comments:

  1. Fabulous! During my 1970s kidhood, A&Ps were on the wane. I have dim memories of a couple remaining in northern Indiana, where I grew up. My parents' families both shopped in the same A&P in South Bend in the 1950s and 1960s -- for my dad's West Virginia-transplanted family, it was the only place in town that sold pinto beans, a staple of their diet. That store operated as an independent grocery until 2008, when it burned to the ground: http://jimgrey.wordpress.com/2008/08/10/lincolnway-foods-burns/.

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  2. Ah, I miss A&P, Top Value and Plaid S&H Green Stamps...wonderful memories of going to A&P with my grandparents and helping lick and stick Plaid stamps in the books, or the TV stamps from Kroger, and going to redeem the books of stamps for goodies. In fact I still have a half-dozen filled TV Stamp books that were left in a cubbyhole in my granny's old desk.

    We had an A&P give it a try here in the late 80s when it took over a market spot in a strip mall next to the local KMart. Kroger's just has the market here, even with Wallie-World in town.

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  3. Absolutely fantastic post Dave. Great work. Thanks Richard.

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  4. The story of A&P is definitely a story to be told. It's also a story I'm young enough to have missed out on: Former store buildings and stale Ann Page and A&P spices in my grandparents' kitchen cabinets are the closest interaction I've had with the chain.

    I wonder when their famous "red circle" logo first came into use? I've been looking through a lot of newspaper microfilms lately, and just for fun I pinpointed the last appearance of the symbol to between February 4 and 11, 1976.

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  5. Jim - Thanks! I grew up in the Chicago suburbs, but my mom grew up in Georgia, so we had pinto beans once in a great while. I grew up in the 70's as well, and A&P was around but not a major player by that time.

    DonHo57 - They were great memories, those Saturday mornings spent licking those trading stamps (S&H in my case) and putting them in the saver books. I always thought it funny that the Kroger Top Value Stamps elephant, "Toppie" was plaid! A little too similar to their competitor, Plaid Stamps. What was up with that?

    I don't know where you're from, but a late 80's entry for A&P was pretty late in the game, for sure. Thanks!

    Richard - Much appreciated! A&P is a serious part of American, for sure.

    Andrew - It's a story that's been told many times, but I've long wanted to cover it here.

    I can relate on the spices thing - my mom had some spices from Kroger that I'm pretty sure pre-dated me.

    As far as the red circle logo goes, if I figure it out, I'll let you know. My guess is that wasn't before 1912, when they began opening the Economy Stores, but I could be wrong. I've seen ads with a diamond shaped logo from the 1905-10 era, and quite a few early ads with no logo at all, just the company name spelled out in fonts that matched the ad text.

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  6. Just found your blog and very much enjoyed this post.

    I shop regularly at that one lone A&P Superfresh store here in DC.

    During summers, I remember when the A&P was the only grocery store in Rehoboth Beach DE and it went through the name change to Superfresh in the early 80's.

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  7. I think the red circle logo was used for approximately 50 years; from the 1920s through the 1970s. I say this because the 1930s A&P you show towards the end of the post is sporting the red circle logo on the window, and the newspaper scans Andrew linked to show the logo disappearing in 1976 in favor of the multicolor oval they're still sporting today.

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  8. I had been told that the Hartford Foundation milked A&P for all the profits until the selling majority interest in the chain to Tengelmann's. This coupled with FTC orders to not operate stores at a loss, among other attempts to break up the so called "monopoly" the Tea Co. had on grocery retailing.

    A&P also began to focus too heavily on its private labels, often not selling the national brand in several categories. While its private labels were some of the best known and loved in the US at the time, not offering a national brand tarnished the chains image on selection. Likely, this occurred to justify and support A&P's huge manufacturing capacity as the chain was on the wane. Ultimately the vaunted A&P brands would be replaced in the 90's, primarily by America's Choice, and in the mid-00's A&P sold off its mot prestigious brand, 8 o'Clock Coffee.

    A&P was a laggard to move to suburban strips, staying with older smaller stores longer than the booming regional chains of the 50's and 60's. Most Centennials and non-Centennial contemporaries didn't get the best real estate and the average size store was still well below that of their competition. They were reluctant to close outdated stores, never seemed to commit to a prototype, and slowly exited markets, keeping low store counts that didn't have the critical mass to justify overhead expenses such as distribution and advertising.

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  9. A&P didn't entirely give up on premiums. They gave S&H Green Stamps during the early 20th century, in the 1910s & 1920s.

    A&P missed the boat on just about every major post-WWII merchandising trend. They were very late to trading stamps and only used them in some territories. They also were slow to adopt "discounting". They often built larger stores in the 50s than in the 60s and were slow to add service departments and pharmacies. The need to keep their private label manufacturing base at capacity is probably one reason they became top heavy with private label merchandise in the 60s. Their sales stagnated through the decade, but they actually added no manufacturing capacity.

    Contrary to what the super market press always said, A&P was an early adopter of suburban locations, including shopping centers. For example, they had a store in the 1939 Forest Hills Plaza in East Cleveland, Ohio and the early postwar (c 1949) Maymore Plaza in South Euclid and had a store in the even earlier Connecticut Avenue Park & Shop in NW Washington, DC. It's not difficult to find major shopping centers like Congressional Plaza in Rockville, MD (c 1960) that had an A&P. Instead, their stagnating sales led them to build fewer new stores as the 60s wore on and even fewer in the 70s, until their big sell-offs of entire divisions. With stagnant sales and declining profits, along with a conservative management strategy, they did not expand. Many of the classic post-WWII super market chains started in outer city areas and quickly entered the suburbs. Unlike A&P, they never had much of an inner city presence--whereas A&P had upgraded their inner city stores to super market status through the 40s and 50s and kept them going. A&P continued to do very good volumes in inner city locations even after that time.

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  10. The fancy decor would be scrapped. The “vermilion red” walls would become simply red. (The color, not the band.)

    I think singing "Holding Back the Years" at the entrance might have gotten people quite excited. :D

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  11. Augusto – Thanks, glad you liked it!

    Steve – I think it may have been introduced a bit before 1920, but in all the various things I’ve read, I’ve never been able to find the actual date the red circle logo was introduced. Sort of surprising, considering how famous it is.

    Ken – That’s about right. The bottom line was that A&P was controlled by overly cautious investors, in this case the Hartford foundation, for decades, and they missed out on huge growth opportunities as a result. In my opinion, monopolies usually end up ending on their own, with no outside intervention necessary. Look at GM or IBM, two other companies that were often vilified as monopolies in decades past. No one would accuse them of that today.

    Their private brand strategy worked for a long time, but eventually came to hurt A&P, coming to a head in the 1960’s when A&P finally woke up to the fact that they were missing out on, among other things, tens of millions of dollars in co-op advertising and promotions that the major name-brand food companies – General Foods, Pillsbury, Coca-Cola, etc. were doling out to their competitors.

    Store locations is another area in which their overcautious policy hurt them a lot. It was well into the 50’s when A&P finally started agreeing to long term leases, whereas their previous insistence on short term cost them many prime slots in the early shopping centers.

    Anonymous – That’s the first I’ve heard that A&P ever used S&H Green Stamps, in fact I’m hard pressed to name any major chain who was using them that early (the 1910’s/20’s). Those are interesting points about their early shopping centers, but overall it seems that they still lagged behind competitors in term of percentage of stores in shopping center locations as opposed to city locations. Excellent point about the volume they continued to do in the cities, which definitely justified the investment in those stores, at least before the areas declined. Thanks!

    Didi – I don’t doubt that! :)

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  12. For those of you who are wondering where that big red A & P logo came from, it started in the early 1930's. The artist was from Brooklyn, NY and worked for an agency named Paris and Pert. The agency had the account for over 30 years until the art director retired and the company was sold to Gardner Advertising who later merged with another agency and so on. A & P was the first company to glamorise grocery shopping. This is noted by the beautiful china and the dresses made by Oleg Cassini which were designed by the artist in his original watercolor paintings. Models were chosen and props made to shoot the ads. The same art director oversaw the ads that appeared in the Sunday New York Times ads. The deadline for the Sunday paper was Wednesday by the end of the day. If it was not ready, the artist stayed until it was put to bed. As a little girl I would go with my grandparents every Saturday to the A & P. My grandfather always knew the prices of all the items on sale that week. I was amazed that he knew everything about the A & P and the prices. One day it hit me when I was much older and my grandfather was in his late 80's. He was the art director who stayed late on Wednesday nights to put the ad to bed and he was the guy who drew all those chickens by hand every week and made those wonderful logos of Ann Page and Jane Parker. Ann Page was a short easy name that worked well for the A and the P. Jane Parker was a simple name for Ann Page's friend.

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  13. Anonymous – Thanks so much for that wonderful story. Clearly, your grandfather took part in the development of an enduring American icon. A&P advertising from that period in particular was beautifully done, and there could be no better showcase in that era than the Sunday New York Times. Wow!

    And I guess one would certainly learn the prices in the midst of putting together those ads. Thanks again for your comment!

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  14. I want to thank grandma for lasting so many years. I was a former employee of A&P in the 60's and 70's climbing up the ladder with a vision to someday retire from this great corporate giant! in the mid 1970's with much transition and change in the corporation I found it important to leave and seek new endeavors, thankfully so! it is a very bitter taste to see what the management over the years has done! My boss a corporate head coming through the ranks ( no mention of the name) gave me very sound advice. He said get out son while you can, the vampires are coming and I don't want you to have no future. He predicted and spot on he was, I quote " one entity after another will come in a steal the life blood out of grandma then leave her on the curb for dead" grandma being Ann Page or A&P so look how right he was. Thank you WJH and JT along with MRS may she rest in peace with many good serving memories in her years of life. Good day!!!

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