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Never Too Big to Fail

A&P is bankrupt. How the mighty always seem to fall.

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I must admit, my first reaction to the headline “A&P Files for Bankruptcy,” was “I didn’t know they were still in business.”

They barely were, clearly. But once, and for many years, A&P was the big dog in the retail world. Forty years ago, as a young magazine writer in New York, I wrote an article on The Great Atlantic & Pacific Tea Co. I didn’t get any cooperation from the company itself, but many “industry analysts” were more than ready to weigh in with what the company was doing wrong. Too big. Too slow to react. Too many bad locations. Dark and dirty stores. Ho-hum private label merchandise.

A&P had been the nation’s largest retailer for much of the 20th Century. But in the late 1960s, it was being pressed by the sleek, modern, forward-thinking Sears Roebuck, with all those suburban locations, great prices, breadth and depth of merchandise and really outstanding private label items.

Sears ruled for 20 years, until all those suburban locations became a liability, there were too many private labels and not enough national brands. They just couldn’t compete with the bright new kid on the block, Kmart. (Is anyone beginning to notice a trend here?)

Kmart claimed Number One for a few years as Sears lagged. It took Sears 25 years to act on the “if you can’t beat them, join them” principle. But by the time of the Sears-Kmart merger in 2005, two weak retail giants merely produced one incredibly weak real estate company.

By then, the new “we’re Number One” was Walmart. And so it’s natural to wait for Walmart’s implosion. But you know, it’s not happening. Not everyone loves the way Walmart does business. But nobody can argue with its formula or, even more than that, its ability and willingness to make changes – improve its stores, test new concepts, introduce new merchandise lines.

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I always thought Walmart’s most brilliant strategy was its first: beginning in the outer-most circles of urban/suburban metroplexes, where people didn’t have many retail options, and moving inward – unlike Sears, Kmart, A&P, et al., who grabbed those early inner-circle suburban locations and then became trapped, when new roads and highways and building booms took the more affluent shoppers further and further out, where guess who was waiting for them.

The article said A&P’s problems began in 2007, when it acquired the New Jersey-based Pathmark chain and ended up with significant debt. But I think its problems were really in place 40 years ago, when a young writer for Sales & Marketing Management magazine couldn’t get them to talk for an article because, after all, what did they have to gain by that? They were The Great A&P. Unsinkable.
 

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