Probably not the war you’re thinking of, although World War II fits in at roughly this point in the timeline. No, this was a war of A&P’s own – one that started earlier and ended much later.
As far back as the mid-1920’s, there were grumblings about the growing power of “the chain stores”. Most of this concern, understandably, was on the part of independent grocers, who by the mid-1930’s were looking at a full third of their potential market going to one competitor – A&P. Predictably, it wasn’t long before politicians on a variety of levels took notice. As a result, throughout the 1930’s, over half of the individual states passed laws regulating the operation and expansion of chains, and in nearly all cases a “chain store tax” was levied for good measure. By necessity, A&P took these as they came, complying quietly in nearly all cases.
As far as A&P’s business was concerned, they had weathered the Depression far better than most companies. Their aggressive pricing policies accounted for one reason, but another key factor was George L. Hartford’s insistence on short-term leases for all A&P stores. Very short term, in fact – the typical A&P store lease was for one year with nine one-year renewal options. In later decades this policy would come back to bite A&P in a big way, costing them many prime early shopping center locations, but the flexibility it gave the company to close or relocate unprofitable stores was an asset in the darkest days of the 1930’s.
Another development was the conversion to supermarkets. Faced with upstart competition from the likes of Michael Cullen, a former A&P employee who had started a chain of giant, self-service food stores called “King Kullen”, and others, it became evident to John Hartford that A&P would have to jump into the fray in order to remain competitive in their key New York/New Jersey markets and elsewhere. After considerable egging on by his brother, George Hartford, the conservative one who controlled the purse strings, agreed to a 100-store experiment with the newfangled supermarkets in 1936. Success soon caused the experimental number to be upped to 300. Before long, the “experimental” designation was dropped altogether, and supermarkets became the way forward for A&P.
In early 1938, according to the 1970 Progressive Grocer A&P Study, while supermarkets constituted just 5 percent of their store base at that point, they were contributing 23 percent of sales and nearly half of the company’s profits. As author William I. Walsh points out in his history of the company, “The Rise and Decline of the Great Atlantic and Pacific Tea Company”, although A&P didn’t come up with the supermarket idea, the fact that the company opened the first supermarkets to be seen in many locales often led people to credit A&P with the concept.
Further adding to the excitement, A&P decided to enter the publishing business. For some years the company regularly issued an illustrated giveaway recipe booklet, called simply “Menus”, but would now introduce a full-fledged women’s magazine, to be entitled Woman’s Day. The decision was spurred on in part by the success of another magazine, The Family Circle, which was then reaching nearly 1.5 million households through five major grocery chains, according to an October 1937 Time article. A&P’s new magazine would carry “menus and home hints”, but “no fiction or film gossip as does Family Circle”, according to Time. Twenty years later, A&P would sell the magazine off to an independent publisher, who made it available to all grocery outlets and other retailers. Of course, Woman’s Day and Family Circle remain staples of supermarket checkouts everywhere, alongside some distinguished longtime competitors and some shall we say “less uplifting” publications. (Personally, I miss the “Weekly World News”. You just can’t find solid news reporting anymore!)
On a more somber note, the “anti-chain store movement” was rapidly growing in intensity by the late 1930’s. By this time, the movement had an official face. Congressman Wright Patman, a firebrand who was aptly nicknamed “the fighting Democrat from Texas”, had taken the issue up as his personal crusade, and his sights were set directly on the good old A&P. In 1936, he had won passage of the Robinson-Patman Act, still a cornerstone of U.S. commercial policy today, which essentially prohibits manufacturers from selling the same item at different prices to different entities, in effect leveling the playing field for smaller retailers who are unable to purchase at the volume level of their larger competitors. (I’m massively oversimplifying this, for space reasons. And in the interest of keeping you awake.)
Two years later, Patman introduced a new bill to curb the influence and spread of chain stores, (accurately) nicknamed the “Death Sentence Bill”. The centerpiece of the bill was a national chain store tax of $1,000 per store, but “with a final clincher”, as the Progressive Grocer study put it – “the total tax would be multiplied by the number of states in which the chain operated”, a provision that would have meant utter devastation for A&P. The numbers in A&P’s case would have added up to a half a billion dollar tax for the company for 1937 – 60 percent of total sales and a mere 6,000 percent of profits. Bye, bye Tea Company, along with Safeway, Kroger, Woolworth and host of other household names. Even cooperative organizations such as IGA would have been under threat, according to the study. Fortunately, Patman’s bill never made it out of committee.
It wouldn’t remain quiet for long, however. In the early 1940’s, the Justice Department’s Antitrust Division filed two landmark lawsuits against A&P, one in Dallas in 1942 and a second in Danville, Illinois, in 1944. For the second suit, the list of charges filled ten pages, which Progressive Grocer condensed to a page and a half and I’ll further boil down to a few lines (This is “Web 2.0”, right? Whatever the heck that means.) as follows. The main points of the lawsuit alleged:
· That A&P purposely ran stores at a loss to drive out competition.
· That A&P held a “partial monopoly”, because of “illegal” practices in manufacturing, wholesaling and retailing.
· That A&P was able to obtain preferential allowances and discounts in violation of the Robinson-Patman Act.
· That A&P took profits from its manufacturing plants and used them to subsidize its retail stores.
· That A&P’s produce subsidiary, The Atlantic Commission Company, which sold to other chains as well, dominated or controlled markets, overcharging or selling inferior products to competitors.
A&P lost the case and a subsequent appeal, eventually agreeing to pay a $175,000 fine and to dismantle the Atlantic Commission Company. The judge who handled the case still had words of praise for A&P: “To buy, sell and distribute to a substantial portion of 130 million people (the U.S. population at the time) one and three-quarters billion dollars worth of food annually, at a profit of 1.5 cents on each dollar, is an achievement one many be proud of.”
Yet it wasn’t over. In September 1949, less than a year after the previous case finally ended, the Attorney General of the United States filed a new lawsuit – this time calling for no less than the Breakup of The Great Atlantic and Pacific Tea Company. Rumors were floating that the government was proposing a plan to split A&P into seven separate regional companies. (For those of you who are at least my age or maybe a few years younger, this may “ring a
bell”. Get it? Ok, I’ll stop.)
A&P had used advertising to a limited extent in their previous struggles to help rally public opinion to their side. Exasperated that they were facing this situation yet again, they declared an all-out P.R. war this time around. In late 1949, a series of full-page newspaper ads were taken out in (according to Time Magazine) some 1,800 papers across the country, laying out A&P’s side of the story in painstaking detail.
By far, the most intriguing of these ads appeared on November 11, 1949, featuring testimonials from several of the company’s competitors, undertaking an impassioned defense of A&P. “Who hollered for Uncle?” “We Agree With A&P” “We Don’t Want the A&P Put Out of Business”, and so on, followed by detailed explanations of their positions. The motivations were wide-ranging –including a genuine respect for A&P as a major food supplier for millions, and concern for their tens of thousands of employees. Several of them started their careers with A&P before striking out on their own, the sentimental ties still evident. And then there were the objections on principle – as a “threat against our system of free enterprise”, a threat to growth aspirations of their own. Or perhaps the objections stemmed from a sense of being exploited, regardless of the potential financial gain for them should A&P go down.
The strategy worked. Before long, letters began pouring into Washington D.C. from hundreds of consumers, upset that the government was threatening to mess with “their A&P”. It soon became evident that a majority of people were convinced that the government’s case against A&P lacked merit. The case slowly faded away, ending in 1953 with a consent decree that called for a handful of wholly inconsequential changes at A&P.
Sadly, the one person who no doubt did the most to help A&P weather these storms passed away before their final legal victory. At age 79, John Hartford was still as active as ever, running A&P along with his brother and sitting on a number of other corporate boards. On September 20, 1951, Hartford collapsed and died moments after attending a Chrysler Corporation board meeting in their famous namesake building in New York City. It would be years before the full magnitude of the loss to A&P, in terms of ingenuity, judgment and fine-tuned empathy for the customer, would be completely realized.
At least now, though, A&P was finally free from all of the legal distractions and could chart its own destiny again.
The photos above are all from Chain Store Age, and from top to bottom, show – an unknown exterior from 1941, the meat counter from the Rockville Centre, Long Island, NY store from 1937, an exterior view from Birmingham, Alabama in 1939, an interior from Pittsburgh in 1937, exterior and interior views from Asbury Park, New Jersey (Or is that Granada I see? No, just Asbury Park.) in 1937, and finally two views of another Birmingham unit from 1939, from the Five Points shopping center, with Scott 5 and 10 next door.
Pictured below are John and George, the brothers Hartford, in contrasting styles of dress and matching Bakelite telephones, as photographed for Life Magazine in 1949. Two of the 1949 ad campaign newspaper pages can be seen in the background. (Thanks to Richard of the great
Viewliner Ltd. site for the tip on the
Google Life Magazine archives. Some fine stuff there!) Lastly, for your reading pleasure, are the two ads pictured behind the Hartfords. Click to enlarge and read.
It’s early in the day, and the crowds haven’t formed yet at Macy’s famous flagship store on Herald Square in the heart of Manhattan. You can be sure that they will, though, because it’s Christmastime, and for many people, shopping at Macy’s has long been an integral part of the holiday. Macy’s was a national name long before they became a national chain, a notoriety that grew immensely with the release of the 1947 film “Miracle on 34th Street”, and the first national telecasts of its famous Thanksgiving Day parade.
