The A & P filed for Chapter 11 on Sunday in White Plains, New York, and immediately received $800 million in debtor in possession loans from J.P. Morgan Chase.
The once great Atlantic & Pacific Tea Company has been failing and flailing for decades with no signs of revival. It listed $3.2 billion in debts, but only $2.5 billion in assets in the bankruptcy filing.
A & P is the pioneering supermarket chain in America. It opened its first supermarket in Braddock, Pennsylvania in 1936.
It was the largest only three decades ago. The A & P has been shrinking eversince. From a peak of 16,000 stores in the early 1930 and 39 states, it is now down to 395 stores in eight states (Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, and Virginia) and the District of Columbia.
At its market peak from 1927 to 1975, the A & P was the dominant food retailer in the United States. Its factories produced much of its private labels, Ann Page, Jane Parker and Sultana. Its Eight O’Clock Coffee was a major seller.
Success masked its signs of decade, as with Kmart. The numbers looked good, but dry rot was spreading.
A & P was plagued by small stores, often in dying markets, high prices, supply problems, and decades of poor management. In essence, it’s uncompetitive. It has to compete not only with strong regional chains, such as Stop and Shop and Shop Rite, but also Walmart. The large national chains, Kroger, Safeway, and SuperValue are holding up, but weaker companies are struggling and individual stores closing.
I remember going into A & P’s I would never go into again, just as with other once great retailers, such as Kmart and Woolworth. The once dominant company has consistently been out-marketed by local chains, such as the family owned Big Y in Western Massachusetts and Connecticut. It recently sold 7 Connecticut stores to Big Y.
The ever shrinking A & P has shredded divisions, states, and all of Canada, just as GM and, Pan Am. They also entered bankruptcy. The decline is shown by the numbers. It had 1,000 stores in 1990, 600 in 2,000, 500 in 2002, 460 in 2008, and 395 today. It closed 25 stores in the Philadelphia area in August. At this rate it will be history within a few years.
Its attempt to reverse the steady decline was to acquire successful or competing chains, such as Farmer Jack, Food Emporium, Kohl’s, Pathmark, and Waldbaum’s Food Mart. It paid $679 million for Pathmark in 2007.
An example of A & P’s poor marketing is in Bronxville, New York. The chain closed the Food Emporium store when it acquired the competitor, giving A & P a monopoly in Bronxville. Shoppers will often drive about 5 miles to the Cross County Shopping Center to shop at a large, clean Super Stop and Shop.
Stop and Shop and Shop Rite chains average weekly sales of $650,000 per store. A & P is an anemic $400,000.
It has pulled out of California, Washington, Texas, Louisiana, Arkansas, Georgia, Florida, North Carolina, South Carolina, Kentucky, Tennessee, Missouri, Illinois, Indiana, Georgia, Wisconsin, New Hampshire, and Vermont.
Ironically, the Big Board trading symbol for A & P is “GAP.”
A & P should follow Woolworth’s lead, close its stores and liquidate.
The company, founded in 1859 as a tea and spice company on Vesey Street in Manhattan, merited only a small blurb at the bottom of page 3 in Monday’s New York Times Business Section.
My, how the mighty have fallen!