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Decline of Corner Grocer Is Cautionary Tale for Entrepreneurs



The corner grocery store has been enshrined in popular mythology as a symbol of simpler times in America, a time when mom and pop shops of all kinds thrived and provided a sense of continuity for their communities and a livelihood for their proprietors. But our memory of the way things used to be is pretty hazy, says author Marc Levinson. Back in the day, he says, few mom and pop grocery stores lasted very long.

Shopkeeping ineptitude played no small part in the numerous failures of corner grocers, said Levinson, the author of the just-published "The Great A&P and the Struggle for Small Business in America" (Hill and Wang).

"In the early 20th century it was incredibly easy to go into the food business," Levinson, told BusinessNewsDaily. "Most of the people who went into the grocery business didn't know anything about it. Most were out of business in three or four years."

Villain of the piece

But the larger villain of the piece was the Great Atlantic & Pacific Tea Company, which sprang from modest beginnings as a tea shop in New York City in the 1850s to become, in the following century, the first retailer in the world to hit the $1 billion mark in annual sales. At its apogee A&P, as it came to be known, owned nearly 16,000 stores across the United States.Kate Levinson

In its ride to retail grandeur, the company upended the food distribution industry. Meanwhile, the death knell sounded for countless mom and pop groceries.

"That was independent of A&P; they couldn't even survive competing against each other," Levinson said.

Creative destruction

A&P represented the disruptive technology and creative destruction of its day, the author said. It's not so much that George and John Hartford, the brothers who took over the business from their father at the turn of the 20th century, were great innovators. They weren't.

"They took a lot of ideas that people had in the air and applied them," Levinson said. "Their skill wasn't innovation; it was putting innovation to use. The A&P story is for me further proof that what matters is knowing how to take innovation and apply it."The company was an early adopter of vertical integration and benefited from the advent of widespread auto ownership, which enabled grocery shoppers to graze for food supplies outside the boundaries of their immediate neighborhoods, as well as of refrigeration and cellophane packaging.

During their 70 years at the helm of A&P, the Hartford brothers created a tremendous food empire. Because of them, Americans ate better and more cheaply than ever. (In the 1940s, the federal government pressed criminal charges against A&P for selling food too cheaply—and won.)  But by midcentury and the death of the brothers, its run had slowed to a crawl. Once a fomenter of creative destruction, A&P was gradually brought to earth by the same disruptive powers it had earlier exercised.


By 2010 the company, which had shriveled to become a largely regional operator with 400 stores in the Northeast, was forced to file for bankruptcy. It's storied Eight O'Clock brand of coffee, which traces its lineage back a century and a half to A&P's founding, is now in the hands of Tata Enterprises, the Indian conglomerate best known for its $2,500 Nano Car and another iconic brand—Jaguar.

What felled the giant? Though the Hartford brothers had remade the company four times over the course of their long careers to adjust to the times, they had failed to make adequate provisions for the future and the leaders to take their place.

The company that had been the pacesetter of its time became a victim of more-nimble competitors.

"John and George had difficulty remaking the company one more time," Levinson said. "Where they went wrong was in bringing in new blood and succession planning . All of the top executives were people that had been there for decades. They had the A&P way of looking at things. They didn't bring in people from the outside."

Mom and pop's place

The saga of A&P's rise is not an indictment of small business, Levinson said, only of small business conducted poorly and our selective memory of times gone by.

"There's nothing wrong with small business," Levinson said. "But there's this myth that small business is the engine of job creation and innovation. A relatively small number of small businesses innovate and become large and create jobs. Most don't."

Even the food business, where A&P was the bully on the beach kicking sand in the face of the 95-pound mom and pop weaklings, offers attractive opportunities for small merchants.

Large companies are trying to replicate the personal experience and niche products that small retailers are able to offer, said Levinson, but it's hard for companies Like Kroger or Walmart to do this at scale.

"There's opportunity there for small retailers, but the opportunity doesn't come from selling canned goods," Levinson said. "What there is not a place for is a small business without a unique reason to be."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.




Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.