Jump to content

A&P: Difference between revisions

From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
No edit summary
No edit summary
Line 8: Line 8:
| image_size = 250px
| image_size = 250px
| image_caption = A&P Corporate Headquarters, Montvale, New Jersey
| image_caption = A&P Corporate Headquarters, Montvale, New Jersey
| former_name = The Great American Tea Company (1859-1869)
| former_name = The Great American Tea Company (1859–1869)
| type = {{ubl|[[Privately held company|Private]]|[[Subsidiary]]}}
| type = {{ubl|[[Privately held company|Private]]|[[Subsidiary]]}}
| industry = {{ubl|[[Retail]]|[[Grocery]]}}
| industry = {{ubl|[[Retail]]|[[Grocery]]}}

Revision as of 03:07, 30 May 2015

"A&P" redirects here. For other uses, see AP (disambiguation).

Template:Other uses2

The Great Atlantic & Pacific Tea Company
FormerlyThe Great American Tea Company (1859–1869)
Company type
Industry
FoundedNew York, New York, United States (1859; 165 years ago (1859))
Founders
Headquarters2 Paragon Drive,
Montvale, New Jersey
,
United States
Number of locations
301 stores[1] (2014)
Area served
Northeastern United States
Key people
Paul Hertz (President & CEO)
Brands
ServicesPharmacy services
RevenueSteadyUS$6.26 billion[2] (2013)
Owners
Number of employees
32,000
Divisions
Websiteaptea.com

The Great Atlantic & Pacific Tea Company, better known as A&P, is a supermarket and liquor store chain in the United States. Its supermarkets, which are under six different banners, are found in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania. A&P's liquor stores, known as Best Cellars, are found in Connecticut, Massachusetts, and New Jersey.[3] A&P's corporate headquarters are in Montvale, New Jersey.[4] Supermarket News ranked A&P #28 in the 2012 "Top 75 Food Retailers and Wholesalers" based on 2012 fiscal year estimated sales of $6.7 billion.[5] Based on 2009 revenue, A&P was the 34th largest retailer in the U.S.[6] From 1915 through 1975, it was the largest food retailer in the nation (until 1965, the largest U.S. retailer of any kind).[7] A&P is considered an American icon.[8] The Wall Street Journal, in a blog post on December 10, 2010, said that "A&P was as well known as McDonald's or Google is today" and that A&P was "Walmart before Walmart."[9]

What is now A&P began in 1859; it established a small chain of retail tea and coffee stores in New York City and a national mail order business. It grew to 70 stores by 1878. In the late 19th century, A&P, still a tea and coffee company, became the country's first grocery chain. At the turn of the century, it operated almost 200 stores. The company grew dramatically after introducing the economy store concept in 1912, growing to 1,600 stores in 1915. After World War I, the company opened stores offering meat and produce. In 1930 the company, now the world's largest retailer, reached $1 billion in sales with 16,000 stores.[10] In 1936, A&P adopted the self-serve supermarket concept and opened 4,000 larger stores by 1950.[11]

A&P's decline began in the 1950s when it failed to keep pace with chains which opened larger, modern supermarkets with features demanded by customers. By the 1970s, A&P stores were out of date; its efforts to combat high operating costs resulted in poor customer service. In 1975, the company hired outside management, closing older stores and building modern ones. When these efforts failed to turn the company around, the heirs of the original owners, and the foundation that owned a majority of the stock, sold to the German Tengelmann Group. A&P then launched a store-closing program financed by the surplus assets of its pension plan.[12]

Starting in 1982, A&P acquired several chains; these stores operated through their names rather than "A&P". While A&P regained profitability in the 1980s, in 2002 it operated at a record loss because of new competition, especially Walmart. A&P closed more stores, which included the sale of its large Canadian division. In 2007, A&P purchased Pathmark, one of its toughest competitors; A&P again became the largest supermarket chain in the New York City area. Highly leveraged after this acquisition, the company experienced financial difficulties because of the recession and filed for Chapter 11 protection in 2010. In late 2011, A&P implemented a restructuring plan to emerge from bankruptcy.[13][14]

On March 13, 2012, it was announced that A&P had emerged from bankruptcy and was now a private company.[15]

History

1860-1900

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.[11]

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 changed the firm's name to Great Atlantic & Pacific Tea Company to promote the then-new concept of prepackaged tea under the Thea-Nector brand. The tea company continued to use the Great American name for mail-order purposes. In 1871, A&P introduced another concept when it offered discounts with the purchase of coffee and tea at its stores.[11]

1888 advertisement for A&P from a Norfolk, Virginia guidebook, listing the range of items carried

George Huntington Hartford (1833–1917) joined Gilman & Company as a clerk by 1861; he 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 the great fire. A&P's first store outside New York City was opened within 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.[11]

To raise revenue, Congress significantly raised tariffs on tea and coffee. Profits on these products declined, and in about 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 Mr. Hartford's sons, George Ludlum Hartford (1864–1957) and John Augustine Hartford (1872–1951) joined the firm. Company lore is 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 the end of the century, the firm had sales of $5 million from 198 stores as well as its mail order and wagon route operations. However, other new grocery chains were expanding more rapidly and blanketing their respective territories while the tea company's stores were spread over a much larger area. The firm quickly found itself at a disadvantage.[11]

1901-1950

A & P, 246 Third Avenue, Manhattan, with the lollypop logo, 1936

In 1901, George Gilman died without a will, starting a legal battle among his numerous heirs. 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 since 1878 and that the company's leases were in his name. The heirs realized that without Hartford, the firm would quickly become unprofitable. Therefore, they agreed to a settlement where A&P was 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.[12] At the end of the litigation, A&P dropped to fifth nationally[11] and the Hartfords moved to rebuild the enterprise. A&P opened an average of one store every three weeks, and expanded wagon routes to over 5,000. A nine-story headquarters and warehouse was built in Jersey City; it later expanded to include a manufacturing plant and bakery.[12]

By 1908, George Hartford Sr. divided management responsibilities among his sons, with George Jr. controlling finance and John directing sales and operations. The two ran A&P for over 40 years. The younger Hartford moved aggressively to adopt the now-familiar 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, A&P operated 400 stores and averaged a 22% gross margin, resulting in a 2% profit.[11]

Food prices were a political issue in the 1912 presidential election; some chains experimented with a no-frills format.[11] After long debate, the Hartfords agreed to John's proposal to experiment with an economy store designed to operate at a 12% gross margin. Capitalized at only $3,000 including its initial inventory, the store operated with only a manager and eliminated fancy fixtures and premiums. 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; Cream of Wheat demanded that all retailers adhere to the company's pricing of 14 cents per box. A&P purchased the product at wholesale, 11 cents per box, 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.[11]

Newspaper ad from New York City, 1922.

Hartford Sr. died in 1917; his will established a one-generation trust divided equally among his five children. The trust was administered by George Jr. and John; both exercised control over the company's stock. A&P's leadership remained constant until the two brothers died in the 1950s.[11]

A & P supermarket, in Snowdon, Quebec, 1941

After World War I, A&P rapidly expanded; in 1925 it operated 13,961 stores.[16] The new, 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, Hartford was 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.[12] In 1927, A&P established a Canadian division; by 1929 it operated 200 stores in Ontario and Quebec.[17] In 1930, the company's 16,000 stores reached $1 billion[10] 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, Sears, and four times that of 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.[12]

A&P's success caused a backlash that threatened to destroy the company. 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 levy federal tax on chain stores. If adopted, this legislation would have put A&P out of business. While this legislation did not move in Congress, in 1936 Patman sponsored the Robinson–Patman Act that would outlaw charging different prices to similar customers. Patman then reintroduced his anti-chain store tax. 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 a letter pointing out that Patman's legislation would significantly increase food prices. The tide of public opinion turned against the bill.[11]

In 1930, an idea developed during the boom years of the 1920s appeared: the first supermarket opened in California, and closer to home, Michael J. Cullen, a former A&P employee, opened his first King Kullen supermarket in Jamaica, Queens, New York. Two years later, Big Bear opened in Elizabeth, New Jersey, and quickly equaled the sales of 100 A&Ps. A&P lost ground; in 1933, sales dropped 19%, to $820 million. Finally, the Hartford brothers agreed to open 100 supermarkets, the first of which was in Braddock, Pennsylvania. The new stores proved to be very successful; in 1938, A&P operated 1,100 supermarkets. The chain continued to build supermarkets; 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.[12]

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 1941, following Pearl Harbor, the military placed many large companies 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 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 companies 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. The company countered that its business share was about 15% range, and that its low-cost strategy resulted in a significant improvement in the nation's nutrition and standard of living. Judge Lindley agreed with the government, fining each defendant $10,000.[11]

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.[11] Thousands of letters poured into the Justice Department supporting the company; the Hartford brothers gave extensive interviews with Time which put them on the magazine's November 13, 1950 cover.[10] Time wrote that, next to General Motors, A&P sold more goods than any other company 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."[16] The case dragged on until the business-friendly Eisenhower administration. In late 1953, the government agreed to drop its demands to break up the company if A&P shut down its produce brokerage that also supplied competitors.[11]

1951-1974

File:A&P logo pre-1975.jpg
A&P's original logo. This was used until 1976.

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 company's longtime secretary Ralph Burger as its new president.[12] While Burger started with the company in 1910 as a clerk in the Glens Falls, New York store,[18] he was a strong 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 brothers John and George in 1929—assuring his control of the company when George died in 1957. George's trust was dissolved; the company's stock began selling on the New York Exchange at $59 per share. For the first time, the company elected six outside directors onto the board. In late 1961, A&P stock peaked at $70.[12]

The seeds for A&P's 50-year fall from the world's largest retailer to a regional supermarket, and bankruptcy, were planted in the 1950s.

  • A&P was starved of capital. While the company was publicly traded, control rested with Ralph Burger, who headed both the corporation and the Hartford trust. Most of the company's profits was declared as dividends to satisfy the income needs of the trust and its heirs. The company also remained opposed to debt financing; the only source of capital was the depreciation account. While other chains invested in larger, modern supermarkets, A&P was slow to update its retail capital plant. By 1970, A&P stores were considerably smaller and older than its competitors.[12]
  • 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[11] 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,[12] including $25 million to construct the world's largest food plant in Horseheads, New York.[18] Because A&P stores were smaller, private labels dominated its shelves and customers found that national brands were often out of stock.[12]
  • A&P's labor costs were higher than those of most competitors. Because A&P stopped growing, a growing percentage of its workers was making better 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.[12]

Burger attempted to reverse downward tonnage figures by reintroducing trading stamps, creating the company'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.[12]

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 started with the company in 1934 as a full-time store clerk. Kane believed that the company could be turned around by focusing on basic store operations including cleanliness, product availability, customer service, and courtesy. When his program stalled, he implemented a strategy to substantially cut prices by converting the chain to a warehouse store concept that became known as WEO (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, but at least some stockholders thought that the offer was attractive considering the company's continuing difficulties.[12] A&P exited California and Washington State in 1971 and 1974, respectively, making Missouri its western-most division.[19]

1975-2000

During the period when Jonathan Scott served as president, A&P introduced this logo. It remains in use at certain stores, but the company stopped using it as its official logo in 2005.
During the Scott era, A&P adopted a new logo and started to build modern stores. This unit is in Belleville, Ontario.

In February 1975, there were plans to close 36% of A&P's 3,468 stores. Kane agreed to resign and was replaced by Jonathan Scott, the 44-year-old president of the successful Albertsons chain. By then, A&P's headquarters had moved to an office complex in Montvale, New Jersey.[12] Scott implemented the Booz Allen Hamilton plan by closing 1,500 stores in three years, reducing the chain to 1,978 units. Scott hired numerous executives from other companies 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" trade name. Scott continued Kane's efforts to improve basic store operations, including cleanliness and customer service, instituting a large training program. By 1977, weekly per store sales increased from $37,000 to over $70,000, with total sales increasing from $6.4 billion to $7.2 billion despite the many closures. Manufacturing was reorganized; older stores closed.[20] While initial results were promising, by 1978, A&P profits started to slide due to economic conditions caused by high inflation.[12]

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, ultimately gaining a majority stake. 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 Grand Union supermarket chain. Many executives recruited by Scott left A&P; they were replaced by Wood's associates from Grand Union.[12]

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 program quickly failed to win American customers who were attracted to other chains offering low prices on national brands.[12]

In 1981 A&P purchased Pantry Pride's Richmond, Virginia division, operating those stores under the 'Pantry Pride' banner until they were converted, along with A&P's other divisions in the region to Super Fresh in 1986.[21][22]

In October 1981, A&P announced a massive program of downsizing to about 1,000 stores plus the coffee plants. Under the plan, A&P were to exit regions, including the Chicago market, plus the Horseheads plant and numerous other manufacturing facilities. To finance this program, the company 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, 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.[12]

The Philadelphia division also was to close, unless the unions agreed to contract concessions. When the unions refused, the company 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 the company formed a new subsidiary, and operated under a different name. The new banner, "Super Fresh", proved profitable. The company realized that the A&P name was not the asset it had been.

In 1982, Stop & Shop exited New Jersey and would not return for nearly twenty years. A&P purchased most of these stores to replace obsolete A&P stores. In 1983, A&P bought Kohl's Food Stores (originally part of the Kohl's department store chain) in Wisconsin from BATUS, enabling A&P to reenter Wisconsin and Illinois. Next, the company reinforced its profitable Canadian division by closing its stores in Quebec, and acquiring Ontario's Dominion Stores.[17] In the U.S., A&P constructed larger 40,000-square-foot (4,000 m2) supermarkets for its A&P Future Stores. In 1985, A&P purchased Waldbaum's, with stores in southern New York and southern New England, and The Food Emporium, an upscale New York City-based chain.[23] The new stores mostly replaced under-performing A&P stores (by the early 2000s, all New York City A&Ps were operating as Waldbaum's or Food Emporium except for its Riverdale, Bronx store which as of 2013 maintains the A&P-fresh banner).[24] In 1989, A&P acquired Farmer Jack in Michigan and Ohio.

Beginning in 1986, A&P launched an advertising campaign where they said they had built a "Proud New Feeling". For the next three years, A&P (and Super Fresh) ads featured brighter, cleaner, more modern stores, happier customers, and claims that they were the #1 grocery retailer in their market area (specifically New York). This was followed by the "Look at us now" campaign beginning in 1989, which was conducted on the same principles as the "Proud New Feeling" campaign.

In 1991 A&P debuted its Bonus Savings Club clipless-coupon card system in its then four A&P-bannered stores in Staten Island, New York. This club card program was a success and was soon expanded to the rest of the division, and eventually the entire chain.[25]

While overall the company returned to profitability, A&P continued to suffer in the South. In the 1990s, it exited Georgia, Alabama, the Carolinas, Virginia, Kentucky, and Tennessee, selling many of these stores to Kroger. In 1993, A&P began a major overhaul of its stores in the Mid-Atlantic states, southern New England, and New Orleans, plus the Farmer Jacks and Kohls. In the late '90s, many of the SuperFresh locations were changed to Farmer Jacks. All Farmer Jacks were closed in the 2000s. Most of the stores smaller than 40,000 square feet (4,000 m2) were closed, replaced with stores ranging from 50,000 square feet (5,000 m2) to 80,000 square feet (7,000 m2). The new units included pharmacies, larger bakeries, and more general merchandise.

2001-2010

A&P modified its oval logo in 2005 after its rebranding, removing the colored bands and shrinking the oval's size. This logo was used until 2012, when A&P debuted a circular logo. This and the 1976 logo seen above are still in use, though.

Wal-Mart gained a dominant position in the grocery industry, forcing many chains to downsize. In 2000, A&P was down to near 600 stores; two years later it declared its largest loss. The company exited Illinois, Wisconsin (with the folding of Kohl's Super Food markets), New Hampshire, and Vermont. The company was reduced to just over 500 stores.

In 2003, A&P spun off the Eight O'Clock Coffee brand to Gryphon Investors; that brand, which would later be turned into a company of its own, would later be sold to Tata Global Beverages in 2006. In 2005, A&P sold its 237-store Canadian division, including the A&P, Dominion, and Food Basics banners. The Canadian stores were bought by Metro Inc., based in Montreal, for C$1.7 billion in cash and shares of Metro. On August 7, 2008, Metro announced that the "A&P" name would be retired within a year, with its stores rebranded as "Metro". A&P's store brands, Equality and Master Choice, were phased out in favor of Metro's brands.[26] In late November 2009, the last Canadian A&P stores, in Sault Ste. Marie, Ontario, were converted to Metro.

A&P adopted a slogan, "Fresh Thinking Since 1859", initially converting about 20 stores to its fresh (lowercase letters) format, and 40 stores in 2006. The first Fresh Market opened in Denville, New Jersey, on August 20, 2004. The Midland Park and Woodland Park Fresh Markets incorporated gourmet food, organics, a wine department, and several food preparation counters which allowed the consumer to taste and purchase fresh meals. The Midland Park unit was in the upscale Ridgewood area of Bergen County, and was A&P's top unit by sales volume.[27] In addition to its format change, A&P's logo became a simple red oval, removing the orange and yellow bands that had been in use since the Scott era. The red oval logo appeared on many of the stores that were converted to the "fresh" format, with the signage on some stores simply reading "A&P fresh". Other "fresh" format stores use a modified version of the A&P Food Market logo.

In early 2007, A&P acquired Pathmark,[28] a long-time mid-Atlantic and northeastern rival, at a final cost of $1.4 billion.[29] 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, A&P faced two hurdles during its acquisition of Pathmark due to a Federal Trade Commission complaint. The FTC declared that as a result of the acquisition, A&P would be a monopoly in parts of Long Island and Staten Island.[30] As part of its settlement with the FTC, A&P was forced to divest a Waldbaum's in Shirley, New York, to Stop & Shop, and five Staten Island stores (a Pathmark in New Dorp, and four Waldbaum's; one each in Castleton Corners, Eltingville, Greenridge, and Willowbrook) to King Kullen.[31] The once-many Waldbaum's on Staten Island (several had originally been A&Ps)[32] were reduced to two, in Rosebank and Pleasant Plains/Tottenville.[33] A&P was later able to reopen its New Dorp Pathmark after it was divested by King Kullen in mid-2009.[34][35] Pathmark became the "price impact" format for A&P; eight Super Fresh stores in the Philadelphia area became Pathmark Sav-a-Centers.

When A&P celebrated its 150th anniversary in 2009, it was ranked No. 21 by Supermarket News of the "Top 75 North American Food Retailers", based on 2008 fiscal year estimated sales of $9.6 billion.[36] The Executive Chairman was Christian W.E. Haub, a member of the family owning the Tengelmann Group of Germany. The President and Chief Executive Officer was Sam Martin. Eric Claus, then President and CEO, resigned on October 20, 2009.

Tengelmann holds approximately 38.5 percent of A&P, with Yucaipa holding a 27.5 percent share; the rest is held by individual shareholders and investor groups.[37] At the time of Chapter 11 bankruptcy filing in December 2010, A&P was down to 395 stores across Connecticut, Delaware, the District of Columbia, Maryland, New Jersey, New York, and Pennsylvania. (Its "Best Cellars" wine store chain does not operate in Pennsylvania, where laws permit wine sales only in Commonwealth-owned-and-operated liquor stores, and wineries, which are allowed to sell their own product.) Best Cellars also operates in Massachusetts and Virginia. A&P has leased space in three urban Pennsylvania stores to the Pennsylvania Liquor Control Board, which operates "Wine & Spirits" stores in the front of these government-run operations.

The recession hit many supermarkets as customers migrated to Wal-Mart 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 at its closed Farmer Jack stores, resulting in 24 lawsuits from property owners.[38] On August 13, 2010, A&P announced that it would close 25 stores; these supermarkets were "facing real estate and cost issues, and underperforming non-core stores."[39] The stores were in Connecticut, Maryland, New Jersey, New York, and Pennsylvania: 13 Pathmarks, 6 A&Ps, 2 Waldbaum's, and 4 SuperFresh stores. These stores closed by mid-October.[40] On September 8, 2010, A&P announced it was selling seven Connecticut stores to Big Y (which did not promise reopening all seven); the transfer was in October 2010.[41]

A&P files for bankruptcy protection

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, it was announced that due to competition, and a weak economy, A&P was filing for Chapter 11 bankruptcy.[13][14] According to documents filed in U.S. Bankruptcy Court in White Plains, New York, A&P listed over $1 billion in assets, and a similar amount of debt. JPMorgan Chase was to provide $800 million in debtor-in-possession financing. A&P had a net loss of $153.7 million for the 12-week period ending September 11, 2010. Its total assets were $2.53 billion and liabilities were $3.21 billion. A&P was removed from the New York Stock Exchange. During 2010, the price of A&P stock fell 92 percent.[42] Pennsylvania-based Martin's Potato Bread discontinued supplying A&P-branded stores after A&P stopped paying Martin's vendors. In addition, A&P's bankruptcy filing led to cash problems at Tastykake, then also headquartered in Pennsylvania. (Tastykake was acquired by Flowers Foods in April 2011.)

On February 15, 2011, A&P announced that 32 additional stores would close by spring. A&P lost about $35 million in March; on April 13 A&P announced that 25 Super Fresh stores would be closed, including those already sold. These closings took place by July in Delaware, Maryland, and Washington, D.C. Also in April, it was announced that the A&P in Armonk, New York, would be replaced by a CVS Pharmacy; this A&P closed the next February.

A&P lost about $56.5 million in June 2011 and abandoned its "Lower Price Project" which began in spring 2010.

In a November 3, 2011 press release on its website,[43] A&P announced that it had entered into an agreement to receive $490 million of debt and equity financing from private investors the Yucaipa Companies, Mount Kellett Capital Management, and investment funds managed by Goldman Sachs Asset Management, subject to approval of the U.S. bankruptcy court. The agreement would enable A&P to complete its restructuring, and emerge from Chapter 11 as a private entity in early 2012. The investment formed the basis of A&P's reorganization plan, which the company filed in mid-November. "This investment commitment is a very important step in A&P's financial and operational turnaround," said A&P President and Chief Executive Officer Sam Martin. "It positions us for a bright future with solid financial backing from sophisticated investors who know our company and industry well, and who also share our vision for A&P's future." Martin added "...With this fresh capital investment and the Court's approval of our plan of reorganization, we anticipate emerging from Chapter 11 early next year in a much stronger competitive and financial position." Following the closing of the transaction and the company's emergence from Chapter 11, A&P's Board of Directors was dissolved, with a new Board of Directors appointed in accordance with the terms of the reorganization plan. The company's stores were operated as usual during Chapter 11.

On August 6, 2011 A&P celebrated the grand opening of its long-awaited Northern Liberties, Philadelphia Superfresh store.[44] This location, originally inherited from Pathmark Stores, Inc. at the time A&P purchased the Pathmark chain, was to not be built as A&P entered financial uncertainty. After lobbying and convincing by local leaders and Philadelphia mayor Michael Nutter, A&P reversed its decision to scrap the location and instead opened it as part of its mid-Atlantic Superfresh division, which they believed could be marketed better in the Northern Liberties area.[45][46]

On January 9, 2012, A&P announced another 14 store closures: Connecticut (1), New Jersey (5), New York (7), and Pennsylvania (1). Three banners were affected: A&P (3), Pathmark (6), and Waldbaum's (5). On March 6, A&P announced that the Pathmark in Lawnside, New Jersey would close at the end of April.

Post-bankruptcy

On March 13, 2012, A&P announced it had emerged from Chapter 11 protection, becoming a privately held company.

On September 11, 2012, A&P announced it would sell its 16 The Food Emporium stores in New York City.[47][48] A&P also announced that the Cherry Street/Pike Slip Pathmark store in Manhattan will close in December 2012, and it is rumored that a high-rise residential complex will be built on the site. On October 4, approximately 40 employees were laid off from the Montvale headquarters.

In 2013, A&P changed its logo again after less than a decade, discarding the oval altogether in favor of a return to a circle, similar to which the company used for decades.

On January 4, 2014, it was said that Sam Martin resigned. Paul Hertz has been named CEO and President in March 2014.

Store design

This store, which was located in Pluckemin, New Jersey, is an example of A&P's store construction from 1955-1970. This particular store stood as it was, with very little modification save for a logo change, until its February 2013 closure.

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 Chinese pagoda. When the company started offering premiums, the wall opposite the counter was equipped with large shelves to display the give-aways. After John Hartford became responsible for marketing in the 1900s, the chain began offering S&H Trading 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.[18]

The early combination grocery/meat/produce stores date to the mid-1920s; its self-service supermarkets began in the 1930s, which were still small by later standards. On average, each first-generation 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.[18] Except for the West Coast stores (which had a marina design), A&P stores constructed from 1955 to 1970 usually featured a distinctive cupola and weather vane (bow and truss) design on the buildings' roofs, red brick finish on walls (including the rear), and a raised triangular point in the front facade where the store's lollipop logo was placed. Some older stores were remodeled to include these features, which became A&P's signature.[49] However, during this period, 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).[12]

Architectural rendering of an A&P Sav-A-Center supermarket plaza, commonly built in the 1980s-1990s.

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). Combination grocery/drug stores were opened under the Family Mart trade name with 40,000 square feet (3,700 m2) of selling area. A&P also built a store in Saudi Arabia. During the Wood era, the company developed the Futurestore concept with stark black-and-white decor.[12] In the mid-1990s, A&P began adding pharmacies to the "Futurestores" and concentrated on building units of 50,000 square feet (4,600 m2) to 80,000 square feet (7,400 m2).

Today's A&P stores usually include a bakery, full-service delicatessen, full-service meat, and a pharmacy, in addition to traditional grocery departments. As of 2012, few "weather vane" buildings remain as A&P supermarkets; several are Waldbaum's and SuperFresh supermarkets. A&P re-branded their mid-Atlantic stores as SuperFresh in the early 1980s and their stores within the four outer boroughs of New York City and Long Island as Waldbaum's in the early 2000s.

Rise and decline in number of stores

Year No. of Stores
1863 5
1878 70
1900 400
1915 1,600
1930 16,000
1950 4,500
1970 4,000
1980 2,000
1990 1,000
2000 600
2008 460
2011 338
2012 310
2014 301

Private brands, then and now

For decades, A&P pioneered in the use of store brands. Eight O'Clock, Red Circle, and Bokar coffees, Our Own tea, Ann Page, and Jane Parker foods, to regular customers, were almost as notable as retail brands the stores carried. Other A&P brands included Sultana, Iona, Cap'n John, Dexo, Dexola, Yukon Club, Sail, Bright Sail, Grandmothers, Marvel, Penguin, Super Right, White House, Cherri-Aid, Sparkle, Bonesse, Sunnyfield, Crestview, Wildmere, Ched-o-bit, Mel-o-bit processed cheeses, Nutley margarine, and Sunnybrook/Silverbrook butter.

A&P-branded butter wrapper from the 1960s

In the 1990s A&P introduced two store brands, America's Choice and Master Choice. The America's Choice name was a rebranding of the entire A&P-brand line, which replaced many older brands, including Jane Parker and Ann Page. Master Choice was A&P's line of premium items including meat and baked goods. Simultaneously, A&P introduced the Health Pride brand of health and beauty aids. Meanwhile, A&P sold Eight O'Clock Coffee to a San Francisco investment firm in 2003; stores continue to sell the coffee. Some SuperFresh stores, plus Super A&P stores in New Jersey, include Eight O'Clock Coffee Cafes, built when A&P owned the brand. The cafes offer coffee and other drinks (America's Choice soda, Rockstar energy drinks), chips, candy, bagels, donuts, fresh baked goods, sandwiches, wraps, and other items. They usually have that day's newspapers available. Added in 2008 and 2009 were the environmentally sensitive Green Way brand, Hartford Reserve (replacing Master Choice), and America's Choice Gold, a brand positioned between America's Choice and Hartford Reserve in terms of quality. More recently, it was announced that America's Choice Reserve would replace the America's Choice Gold line in produce, poultry, bakery, and deli.

In 2009, the 150th anniversary of A&P, store brands introduced included Via Roma (Italian cheeses, pasta, pizza, fresh cannoli), Preferred Pet (dog and cat foods), Market Spa (shampoos, conditioners, and lotions), Live Better (over-the-counter health products, including pain relievers, allergy relief, cough drops, vitamins) and America's Choice Kids (child-healthy foods). The number of store-brand products had grown to over 20,000. In 2010, A&P added entry-level store brands (Food Basics and Home Basics) in yellow packaging. "See yellow, save green" is the slogan for these brands. Food Basics' products include discount-priced canned and bottled products, evaporated milk, frozen confectionery, produce, and meat, while Home Basics' line include bargain-priced paper, toilet tissue, detergents, and plastic food wraps.

A&P's newest store brand is The Food Emporium Trading Company.

Company slogans

  • "Who cares? We care" (used in magazine advertisements and in commercials in the 1960s)
  • "You'll do better." (1970s)
  • "WEO! How A&P prices have changed! (early 1970s. "WEO" was an acronym meaning "Where Economy Originates" or Warehouse Economy Outlet)
  • "The time has come to put price and pride back together." (mid-1970s)
  • "We pick the best so you can, too." (used in conjunction with the Price and Pride campaign)
  • "We Watch Our P's and Q's" (early 1980s)
  • "We Built A Proud New Feeling" (1986)
  • "Come Share the Proud New Feeling/Share The Feeling" (1988)
  • "Look at us now." (1989)
  • "The Great Store Just Next Door" (1993)
  • "Doing More For You" (1994)
  • "Save! More Ways" (1994, used concurrent with "Doing More For You)
  • "The Great New Store Just Next Door" (1998)
  • "We're fresh obsessed." (Early 2000s, borrowed from the Canadian division)
  • "Fresh Thinking Since 1859" (current)
  • "The Freshest Products." (current)

Trade names

Current banners

Defunct banners

Woman's Day

The publication Woman's Day was launched by A&P in 1937. Originally sold exclusively at A&P stores, Woman's Day was purchased by an independent publisher in the mid-1950s, and no longer has any connection to the supermarket chain.

In media

See also

References

  1. ^ "A&P Key Facts". Retrieved 2 November 2014.
  2. ^ "Great Atlantic & Pacific Tea". America's Largest Private Companies. Forbes. Retrieved 2 November 2014.
  3. ^ A&P Press Release, December 12,2010
  4. ^ "Contact Us." Great Atlantic and Pacific Tea Company. Retrieved on June 24, 2009. "Write to: A&P Customer Relations Department, 2 Paragon Drive, Montvale, NJ 07645"
  5. ^ "SN's Top 75 Retailers for 2010". Supermarketnews.com. 2009-12-15. Retrieved 2010-07-15.
  6. ^ "2010 Top 100 Retailers". STORES.org. July 2010. Retrieved 2010-07-15.
  7. ^ Jackson, Kenneth T. The Encyclopedia of New York City, 1st Edition. Yale University Press, p. 502.
  8. ^ "Everything You Need to Know About the A&P Bankruptcy". wsj.com. December 13, 2010. Retrieved 2010-12-14.
  9. ^ "A&P Heading to the Checkout Counter?". WSJ.com. December 10, 2010. Retrieved 2010-12-12.
  10. ^ a b c John Hartford Time Magazine Cover
  11. ^ a b c d e f g h i j k l m n o Levinson, Marc (2011). The Great A&P and the struggle for small business in America. Hill and Wang. ISBN 978-0-8090-9543-8.
  12. ^ a b c d e f g h i j k l m n o p q r s t u Walsh, William (1986). The Rise & Decline of The Great Atlantic and Pacific Tea Company. Lyle Stuart Inc. ISBN 0-8184-0382-9.
  13. ^ a b N.J. grocer A&P files for bankruptcy
  14. ^ a b "A&P, Century-Old U.S. Grocery Store Owner, Files for Bankruptcy"
  15. ^ "Supermarket chain A&P emerges from bankruptcy"
  16. ^ a b "Red Circle & Gold Leaf," Time Magazine, November 13, 1950.
  17. ^ a b History of A&P Canada from Metro Inc. website
  18. ^ a b c d Anderson, Avis (2002). The Story of the Great Atlantic and Pacific Tea Company. Arcadia. ISBN 978-0-7385-1038-5.
  19. ^ "Sweeping Changes Outlined By A.&P.'s Vice Chairman: Campaign for Better Image Is Planned, Dropping of W.E.O. Tag Considered". New York Times. 1975-01-20.
  20. ^ "A CSA full-issue study of A&P". Chain Store Age. December 1977. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  21. ^ http://www.flickr.com/photos/42444189@N04/5452098680/in/set-72157622354737793 A&P Pantry Pride
  22. ^ http://dcgrocery.multiply.com/journal/item/333/Pantry-Pride-1971-1981 DC Grocery - Pantry Pride, 1971-1981
  23. ^ The Food Emporium company history
  24. ^ http://ap.apsupermarket.com/storelocator/5661-riverdale-ave 5661 Riverdale Ave
  25. ^ Thissen, Carlene and John Karolefski. Target 2000: The Rising Tide of Technomarketing. Woodstock, American Book Company/Retail Systems Consulting. 1998. ISBN 1578140072
  26. ^ "The Great Atlantic & Pacific Tea Company, Inc. Completes the Sale of A&P Canada" (Press release). The Great Atlantic and Pacific Tea Company. August 15, 2005.
  27. ^ "The Great Atlantic & Pacific Tea Company, Inc. Announces Financial Results for 2004 Fourth Quarter and Full Year, Plans for Major Strategic Restructuring" (Press release). The Great Atlantic and Pacific Tea Company. May 10, 2005.
  28. ^ A&P buys Pathmark Stores
  29. ^ "A&P, Pathmark Complete Merger". Retrieved 2007-12-20. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  30. ^ http://www.ftc.gov/os/caselist/0710120/0710120cmplt.pdf Docket No. C-4209
  31. ^ http://www.ftc.gov/opa/2007/11/pathwork.shtm FTC Challenges A&P's Proposed Acquisition of Pathmark Supermarkets Companies Required to Sell Six Supermarkets in Staten Island and Shirley, New York
  32. ^ "Island A&P Stores Now Waldbaum's". Staten Island Advance. 2000-10-03.
  33. ^ http://www.waldbaums.com/pages_aboutUs_SL.asp Store Locations: Welcome to our store locator page where you can easily find a Waldbaum's store nearest you!
  34. ^ http://www.silive.com/news/index.ssf/2007/11/with_5_new_locations_king_kull.html Supermarket chain moving on greater Island presence
  35. ^ http://www.silive.com/eastshore/index.ssf/2009/08/with_ceremony_pathmark_returns.html With ceremony, Pathmark returns to Staten Island's New Dorp community
  36. ^ 2009 Top 75 North American Food Retailers:A&P Profile, Supermarket News. Retrieved October 26, 2009.
  37. ^ "Company Facts" sidebar, A&P website. Accessed 10/26/2009.
  38. ^ A&P stops rent on Farmer Jack spaces: 24 lawsuits filed; owners in default
  39. ^ Mestanza, Jean-Pierre. "N. Bergen Pathmark to close" Hudson Dispatch Weekly; September 1, 2010; Pages 1 and 5
  40. ^ A&P parent to close 25 stores in five states
  41. ^ Big Y buying seven CT A&P stores
  42. ^ Tiffany Kary (December 13, 2010). "A&P, U.S. Grocery-Store Chain, Files for Bankruptcy". Bloomberg Businessweek. Retrieved December 21, 2010.
  43. ^ [1]
  44. ^ http://aptea.com/media/press-release/ap-opens-new-superfresh-store-philadelphias-northern-liberties-neighborhood A&P Opens New Superfresh Store in Philadelphia's Northern Liberties Neighborhood
  45. ^ http://articles.philly.com/2011-08-26/news/29930647_1_new-supermarket-superfresh-pathmark Northern Liberties gets a supermarket
  46. ^ http://www.bizjournals.com/philadelphia/news/2014/01/10/reports-ceo-of-superfresh-parent-is-out.html CEO of Superfresh parent is out, say reports
  47. ^ http://www.crainsnewyork.com/article/20120911/RETAIL_APPAREL/120919975 A&P puts Food Emporium up for sale
  48. ^ http://www.northjersey.com/news/169422396_A.html A&P to sell off Food Emporium stores
  49. ^ Groceteria.com article on A&P
  50. ^ http://eater.com/archives/2013/06/12/supermarket-superstar-to-air-july-22-on-lifetime.php Michael Chiarello to Mentor on Supermarket Superstar

Further reading

  • That Wonderful A&P!, Hoyt, Edwin P., Copyright 1969, Hawthorn Books
  • The Rise & Decline of the Great Atlantic & Pacific Tea company, Walsh, William I., Copyright 1986 Publisher Lyle Stuart
  • The Great A&P and the Struggle for Small Business in America, Levinson, Marc, Copyright 2011, Hill and Wang
Wikimedia Commons has media related to The Great Atlantic & Pacific Tea Company.
Retrieved from "https://en.wikipedia.org/w/index.php?title=A%26P&oldid=664655797"