The Great A and P and the Struggle for Small Business in America Part 8

6. George Melloan, "Supermarket Surge: Bigger, Frillier Stores Rise Across Land in Record Building Boom," WSJ, October 19, 1953. The 1954 tax law allowed extremely rapid depreciation of commercial buildings, providing developers with large amounts of tax-free income for the first ten to fifteen years of a building's life; see Thomas W. Hanchett, "U.S. Tax Policy and the Shopping-Center Boom of the 1950s and 1960s," American Historical Review 101 (1996), 10821110. The queen visited the Giant supermarket in Hyattsville, Maryland, on October 19, 1957. On evening hours, see Progressive Grocer, April 1952, 114.

7. U.S. Bureau of the Census, 1958 Census of Business, vol. 1, Retail Trade-Summary Statistics (Washington, D.C., 1961), 2-4, 2-17, 3-4. In 1958, 80 percent of all food stores, excluding seasonal farm stands, had three or fewer paid employees. On store owners' income, see Progressive Grocer, November 1954, 43, 54.

8. As late as 1959, Burger defended the decision not to expand in the West and the Southwest with the comment, "It's silly to Pioneer too much. Once you get out of Chicago, people have to drive for miles and miles to get to densely populated areas as we know them here." See Bedingfield, "Wary Empire Builder at A&P."

9. In 1953, the average supermarket lease at a shopping center lasted 10 years, with two five-year renewal options, and fixed the rent at 1 percent of sales. Stores at non-shopping-center locations typically had 10-year leases and fixed-dollar rents. By 1959, the vast majority of new supermarkets had leases of 15 years or more. A&P's average during this period is unknown, but in 1971 its average lease commitment was 5.8 years, far less than its compet.i.tors'. Progressive Grocer, January 1954, 83, and March 1960, 130; "A&P-1972," Harvard Business School Case 9-27-114, 1972.

10. Melloan, "Supermarket Surge"; Progressive Grocer, February 1952, 70; October 1952, 116; November 1951, 14; May 1954, 144; and April 1960, F3.

11. Progressive Grocer, July 1953, 105, and September 1953, 38; Charles E. Egan, "Brownell Scores 'Fair Trade' Laws," NYT, April 2, 1955; "Discount Houses Strengthen Grip," NYT, January 3, 1956; c.o.x v. General Electric, Supreme Court of Georgia, January 10, 1955, 222 Ga. 286; Union Carbide and Carbon Corp. v. White River Distributors, Supreme Court of Arkansas, February 7, 1955, 224 Ark. 558; McGraw Electric v. Lewis & Smith Drug Co., Supreme Court of Nebraska, February 11, 1955, 159 Neb. 703.

12. "George Hartford of A&P Dies at 92," NYT, September 25, 1957; "Geo. Hartford, Head of A&P, Dies at Age 92," Montclair (N.J.) Times, September 26, 1957.

13. "Hermit Kingdom: The Isolated A&P Eases Its Border Guard After a Subtle Struggle," WSJ, December 12, 1958.

14. "A&P Proposes to Revise Set-Up," NYT, November 7, 1958; "Evolution at A&P," NYT, November 8, 1958; "Big Public Offering of Stock in A&P Set by Hartfords," NYT, March 5, 1959; "Two A&P Holders to Sell 1,800,000 Shares to Public," WSJ, March 5, 1959; "A&P 1,800,000-Share Secondary Offering on Market Priced at $44.50," WSJ, March 25, 1959.

15. "Hermit Kingdom."

16. "How Goliath Grew: A&P's Saga Includes a PaG.o.da, Price Wars, and Buying Brigades," WSJ, December 19, 1958; "Votes at A&P," Time, December 22, 1958; Bedingfield, "Wary Empire Builder at A&P."

17. Gross profit figures through 1943 were revealed in the Danville trial exhibits and reported in Adelman, A&P, 436. Gross profit figures for 196270 are in "A&P-1972." "A&P Ends Ban on Trading Stamps," WSJ, January 27, 1960; "A&P to Start Issuing Trading Stamps in More of Its Grocery Stores," WSJ, January 30, 1962; Progressive Grocer, December 1963, 52, and April 1963, 6.

18. Tedlow, New and Improved, 250; Progressive Grocer, Facts in Grocery Distribution (1962), 13; Progressive Grocer, February 1962, 102, and April 1962, 56; James J. Nagle, "Most Food Chains Limit Side Lines," NYT, March 6, 1960; James J. Nagle, "Food Chains Turn to Discount Field," NYT, September 3, 1961; "A&P Called Interested in Food Concession of a Proposed Discount Store in Illinois," WSJ, August 30, 1961; "California Firm Says It Is Discussing Drug Units at Some A&P Stores," WSJ, October 18, 1961; "A&P Plans General Store Next to a Supermarket," WSJ, March 15, 1962; "A&P Closes Test Store Retailing Nonfood Items," WSJ, April 1, 1964.

19. "Public Holders Attend A&P Annual Meeting for 1st Time, Told Dividend May Be Raised," WSJ, June 5, 1959; "A&P Says It Won't Increase Prices to Get Higher Profits; 1st Fiscal Period Net Fell," WSJ, June 22, 1960.

20. Progressive Grocer, April 1960, F13; October 1961, 42; October 1965, K12, K32.

21. "John D. Ehrgott Elected A&P President Despite Protest by All 6 Outside Directors," WSJ, January 25, 1963; "Revolt Against Age," Time, February 1, 1963.

22. Robert E. Bedingfield, "Hartford Will Sell A&P Shares," NYT, June 8, 1966.

23. Vartanig G. Vartan, "Quiet Evolution Noted at A&P," NYT, June 28, 1964; "A&P Sales Drop 2.6% in Quarter," NYT, July 10, 1964; Dan Dorfman, "Heard on the Street," WSJ, August 22, 1968; "Foundation Rejects Data Processing Bid," WSJ, December 11, 1968; Ernest Holsendolph, "Gulf & Western Bids for A&P Stock," NYT, February 2, 1973; Ernest Holsendolph, "Gulf & Western Draws New Rebuff on A&P Bid," NYT, March 13, 1973.

24. Fred M. Hechinger, "U.S. Foundations Worth 11 Billion," NYT, July 11, 1960; Leonard Sloane, "Crucial Year for Chain," NYT, February 5, 1973; Jacobson, Greatest Good, 3, 235; "Hartford Foundation Asks A&P to Plan a Stock Sale," NYT, May 1, 1976; "Market Place," NYT, July 6, 1976.

25. "Tengelmann Pursuing Mergers," NYT, January 20, 1979; "Tengelmann Unit Buys A&P Shares," NYT, February 22, 1979.

22: THE LEGACY.

1. A&P filed for protection under chapter 11 of the U.S. Bankruptcy Code on December 12, 2010.

2. On consolidation in the manufacturing sector, see Naomi R. Lamoreaux, The Great Merger Movement in American Business, 18951904.

3. McGrath's speech to the United States Wholesale Grocers' a.s.sociation, quoted in Progressive Grocer, April 1950, 162.

4. For an attempt to a.n.a.lyze the economic benefits of entrepreneurship in a rigorous fashion, see William J. Baumol, The Microtheory of Innovative Entrepreneurship.

5. 57 F. Supp. 635, 664.

6. James W. Gruebele, Sheldon W. Williams, and Richard F. Fallert, "Impact of Food Chain Procurement Policies on the Fluid Milk Processing Industry," American Journal of Agricultural Economics 52 (1970), 395402, found, for example, that vertical integration in milk processing resulted in fewer but larger dairy plants. The economics of vertical integration subsequently changed in ways disadvantageous to A&P. In 1965, the company opened the world's largest food-processing plant in Horseheads, New York. The Horseheads plant, with 1.5 million square feet under a single roof, was A&P's first large investment in food manufacturing in decades. It made 550 different products, from canned soup to mayonnaise, all for sale under the trusted Ann Page name. But the rise of television advertising in the 1950s had given a boost to brand-name foods and dulled the appeal of store brands such as Ann Page. As A&P responded to declining sales by closing stores, the Horseheads plant was badly underutilized. It was finally abandoned in 1983. In a neat historical irony, part of its site was later occupied by a retailer that decided not to integrate vertically into manufacturing: Walmart. "Wal-Mart to Hold Grand Opening," Corning (N.Y.) Leader, February 28, 2008, www.the-leader.com/news/business/x2052202396, accessed June 10, 2010.

7. On the Illinois banking laws, see www.obre.state.il.us/cbt/STATS/br-hist.htm, accessed June 30, 2010; Tara Rice and Erin Davis, "The Branch Banking Boom in Illinois: A Byproduct of Restrictive Branching Laws," Chicago Fed Letter, May 1, 2007. Colorado's motor vehicle dealer statute, Colorado Statutes 12-6-120.5, is one of many that bar manufacturers from selling cars to the public. "Liquor Initiatives Stir Up Old Dispute," Seattle Times, August 21, 2010. Alabama's ban on self-distribution by brewers can be found in t.i.tle 28, Chap. 9 of the state code. On professional licensing, see Stephanie Simon, "A License to Shampoo," WSJ, February 7, 2011.

8. There is an extensive literature on the industrialization of food, explored most eloquently in Michael Pollan, The Omnivore's Dilemma (New York, 2006).

9. Among the studies comparing chain and independent grocery prices, see FTC, Chain Store Inquiry: Prices and Margins of Chain and Independent Distributors, Vol. 4 (Washington, D.C., 1933 and 1934); Paul D. Converse, "Prices and Services of Chain and Independent Stores in Champaign-Urbana, Illinois," NATMA Bulletin, October 1931; James L. Palmer, "Economic and Social Aspects of Chain Stores"; Phillips, "Chain, Voluntary Chain, and Independent Grocery Store Prices, 1930 and 1934"; Taylor, "Prices in Chain and Independent Grocery Stores in Durham, North Carolina," 413.

10. Data in U.S. Bureau of the Census, Historical Statistics of the United States, 324, show that food spending in 193435 came to one-third or more of income for households with annual incomes below $1,500, a definition that took in sixteen million households. Per capita consumption and nutrition are in ibid., 328. On inner-city grocery prices, see Donald E. s.e.xton Jr., "Comparing the Cost of Food to Blacks and to Whites-a Survey," Journal of Marketing 35 (July 1971), 45.

11. Numerous books explore such claims against Walmart; see, for example, Charles Fishman, The Wal-Mart Effect; Nelson Lichtenstein, The Retail Revolution: How Wal-Mart Created a Brave New World of Business; Nelson Lichtenstein, ed., Wal-Mart: The Face of Twenty-First-Century Capitalism; and Ellen Ruppel Sh.e.l.l, Cheap: The High Cost of Discount Culture.

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