A&P, Once The US’s Largest Supermarket Chain, is Discounting Its Shoppers, And Selling Its Stores

Some years ago, there was a U.S. supermarket company called Grand Union. Among the strange things it did in the 1980’s was to establish – and widely advertise – a policy that declared certain prices would “never” be raised. It also opened a store so large (‘only’ around 120,000 square feet) that a team of roller skaters was employed to function as on-the-go customer service agents, able to quickly get to and, supposedly, help customers find whatever.

Both those initiatives proved – as any right-thinking person could have predicted – disastrous.

Perhaps the reason those and other poorly-thought-through initiatives were, um, initiated was because Grand Union owners failed, for one or another reason, to retain their tenuous grip on the chain for more than a few years at a time.

Wikipedia makes the repeated ownership changes sound fairly innocent. Some observers at the time had a different perception – not least because many senior managers remained in place and, significantly, benefited from unearned payments supposedly designed to keep them in place as a transition occurred. When that happened a couple of times, and the same senior managers benefited, even as some of them participated in the decision-making to hand out those unearned payments, the situation came to be perceived as something of a sham.

(The situation wasn’t made to appear any more palatable when one senior executives, a corporate communications guy with good reason to be in touch with all kinds of people, ended up dead, under very suspicious circumstances.)

Was something ‘wrong’ going on, to befit a select bunch of executives through the purloining of the chain’s piggy bank? The truth on that situation will never, in all likelihood, be known.

But then there’s the case of A&P – the Great Atlantic & Pacific Tea Company, once the U.S.’s largest supermarket chain. Time was, it did both smart things and some not-so-smart ones.

For many, many years, A&P owned a pre-supermarket style store in New Orleans, a block or two from Jackson Square.

That’s in the French Quarter, which is ‘open for business’ 24/7, as was this store. And it was, in its latter years, truly a ‘cash cow’ for A&P: Despite its small (less than 10,000 sq. ft.) size, this store, whose mortgage had long since been ‘burned’, did an incredible volume of business, not least because it was highly visible and, as or more important, the only store of its type within easy walking distance of the French Quarter area’s many hotels.

And a lot of nearby residents: The French Quarter is bounded, sort of, on one side by Mississippi River, on another by Canal Street, and on two other sides by the neighborhoods that housed, pre-Hurricane Katrina, a goodly number of the people who devoted their working days (or nights) to caring – usually behind the scenes – for the guests of those hotels and the spots that truly drew a lot of those hotels’ guests to ‘The Big Easy’.

(Since Katrina, the population has shifted a bit, with many of the working class people being displaced, or divorced from the city’s environs by choice.)

New Orleans is one of the few cities in the world that actively encourages people to stroll down the street carrying a loaded cocktail glass. Bourbon Street is famous/infamous for ‘girlie shows’ and – too infrequently recognized by tourists – scams of every conceivable sort. Several block of the street are seldom without a few strolling possessors of potent containers with trouble- and/or regret-causing potential.

The street’s nearly wall-to-wall bars (few of which have door keys, because they never close) all are over-priced, and the girls lounging within them will seek — perhaps with a friend’s help — compensation for their time even if a temporary ‘boy friend’ is unable to do what he intended to with her.

New Orleans is a tough town.

A&P_logo.svg

But not, for that store, for A&P. It was a gold mine, I was told – as a reportorial representative of a trade magazine for supermarket executives. The overhead (thanks to the paid-off mortgage) was manageable, the merchandise could be priced way higher than even an isolated rural store could get away with, so the profit margins were “great”!

Sadly, that hasn’t proved to be true across the shrinking chain, which retrenched some years ago to a point where it operated recently only in the Northeast U.S.

Efforts to set itself aside from the competition resulted in more or less the same thing someone else was doing, until they really stepped outside the box, and launched a concept store no one, anywhere, had ever tried before: A&P’s ‘Futurestore’, launched in the mid 80’s, was intended to focus customers attention totally on merchandise – by having the entire store’s decor done in black and white.

The effect was stunning – not necessarily favorably — to one versed in viewing supermarket ‘concepts’ and iterations across the US. Locals pay less attention to a store’s decor than to its offerings, reinforced my impression hat this was an exhibit of a lack  of corporate common sense.

The first one I saw, the second one the company opened (and I was there a few days before it opened), was in Baton Rouge, in 1985 or thereabouts. By that time, I’d been observing supermarket customers’ reactions to everything for a long time, from one side of the US to the other. Sadly, for A&P, as suggested above, many who walked into this store gave the decor nary a second glance. They hadn’t come for decor; They’d come to buy food.

Increasingly, as years went by, shoppers decreased placing A&P stores atop their shopping destination lists. Even the few so-called ‘black and white’ stores came to be struggling, as attention to details – including appearance maintenance, cleanliness, and customer service – took repeated hits.

Recently, the company filed for Chapter 11 bankruptcy. Its stores would be sold, or closed, inventory would be moved at – if necessary – ‘bargain basement’ prices, and many, many employees – some of whom had’d considered themselves to be a part of been part of ‘the A&P family’, for decades — would be, as announcements of corporate exec departure press releases are wont to say, be set loose “to pursue other opportunities.”

Meanwhile, in the executive suite, wailing and gnashing  of teeth was performed only for public consumption: A special fund, of many millions of dollars, was enabling the paying out, to select execs, of $9.4 million  — split between, um, a mere eight (8) execs, according to filings in the U.S. Bankruptcy Court for the Southern District of New York.

Not surprisingly, as a possible 15,000 UFCW (United Food and Commercial Workers Union) face the loss of their jobs, “ the large payments have upset unionized employees, who accepted wage and benefit cuts to help A&P emerge from an earlier bankruptcy,” according to Progressive Grocer magazine.

No doubt.

Relations between the union and A&P managers have deteriorated steadily since the bankruptcy court filing, says Harvey Whille, President of UFCW Local 1262  in Clifton, New Jersey. The union says it is playing a very active role in helping its members get resettled in other companies, to have stores “be bought by owners who will run them as union stores.”

Forget the Brooklyn Bridge. There’s an as-significant offer in the offing for UFCW Local 1262 President Harvey Whille: Stores with questionable potential being marketed at super-discounted prices.

This just in: Some A&P stores – the ones that have been kept up, and those that can easily be configured to address consumers needs – are being sold. Delaware-based Acme Stores, a wholly owned subsidiary of Idaho-based Albertsons (primarily a supermarket operator), is buying 71 stores for a total of $246 million, and Stop & Shop, New England’s largest grocery chain (and a wholly-owned subsidiary of the Dutch conglomerate Ahold), is picking up 24 for $124 million, according to BloombergBusiness. Ahold is grabbing stores for $5.1 million apiece. Acme/Albertsons is growing its chainfor a tad less than $3.5 million per store!

The US grocery market, like some others, has been consolidating for years – decades, in fact. Always, always, there are promises that the increased ‘scale’ of the larger company will, somehow, benefit, consumers. That seldom proves to be the case.

Former A&P customers should expect no better.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s