A&P was ‘the Wal-Mart of its day.’ Now it’s filing for bankruptcy.

Thad Moore
July 20,2015
Washington Post

The Great Atlantic & Pacific Tea Co., operator of A&P supermarkets, said July 20, 2015, that it is filing for Chapter 11 bankruptcy with plans to sell off stores as it faces increasingly tough competition. (Mel Evans/AP)
In its heyday, A&P ran 16,000 grocery stores across the country, a juggernaut that became the world’s largest retailer and drew the ire of the federal government.
Today, it runs fewer than 300, mostly in New York and New Jersey, and it’s poised to lose them, the 156-year-old company said Monday.
Saddled with debt and struggling for decades, A&P and its corporate owner filed for bankruptcy protection overnight, its second Chapter 11 filing in five years and the latest blow to a former mammoth apparently sliding toward extinction.
The New Jersey-based company, which also runs the Food Emporium, Pathmark and Superfresh chains, says it has found buyers for 120 of its stores, plans to close 25 more and is looking to sell the rest as it aims to close the gap between the $1.6 billion in assets it has and the $2.3 billion it owes.
Meghan Gavigan, a spokeswoman for the company, wouldn’t say what would happen to the remaining stores if A&P can’t find buyers.
“After careful consideration of all alternatives, we have concluded that a sale process implemented through chapter 11 is the best way for A&P to preserve as many jobs as possible, and maximize value for all stakeholders,” A&P chief executive Paul Hertz said in a statement.
Once the target of federal anti-trust lawsuits – including one it lost in 1946 – the chain’s slide began in the 1950s after its leaders, George and John Hartford, died, said Marc Levinson, who wrote a history of the company, “The Great A&P and the Struggle for Small Business in America.”
New management tried to play it safe, ending a series of pivots that took A&P from a mail-order tea company to a chain of small stores to a supermarket behemoth. But the company made bad business moves, Levinson said, missing out on California’s rapid growth after pulling out of the state and investing in manufacturing as brand-name food took off.
In the decades that followed, the company that popularized the supermarket model with low prices and massive reach – “the Wal-Mart of its day” – was lapped by the competitors it helped spawn, Levinson said.
Kurt Jetta, founder of consumer analytics firm Tabs Group, called the bankruptcy filing an “inevitable end” for a brand that slid from public consciousness decades ago.
“This was a bankruptcy that came as a surprise to absolutely no one in the industry,” Jetta said.
A&P’s bankruptcy filing comes amid a period of flux in the grocery business that, analysts say, exacerbated the company’s woes. Revenue growth has slowed, and competition has ramped up from low-cost retailers like Wal-Mart and Aldi and high-end stores like Whole Foods.
That pressure has led to a flurry of mergers and buyouts in the industry in recent years as companies with flattening sales seek to grow their profits through cost-cutting. So far this year, that’s included the acquisition of Safeway by Albertsons and the corporate owner of Food Lion by the owner of Giant, deals that created two of the nation’s biggest chains.
A&P tried that strategy in 2007 when it bought Pathmark, another New Jersey-based chain, for $1.3 billion. The gambit didn’t work.
Howard Davidowitz, who runs the retail consulting firm Davidowitz & Associates, said the bankruptcy shows that corporate maneuvering alone can’t keep a business afloat.
“In the end, how impressed will be the consumer be? And that’s the question you have to work on,” Davidowitz said. “A&P never got around to it. They never did anything to fix anything.”
To Levinson, A&P’s decline is a cautionary tale that even a giant can fall if it doesn’t keep up.
“The big lesson from A&P is that businesses have to keep changing, and when a business stops changing, it’s sentencing itself to death,” Levinson said. “By the late ’50s, A&P was not the low-cost retailer. It was just another retailer.”

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