Marc Levinson is a jack of many trades — he’s an author, economist, and historian. In our joint interview with STORES, Marc shares his passion for small businesses, the changing environment of grocery retail, and discusses his new book — The Great A&P and the Struggle for Small Business in America.
My interest in A&P has less to do with the company’s history than with the larger social issues that come into play. One of these is that A&P’s approach to selling food — managing tightly, cutting out middlemen and pressuring suppliers to cut costs — had absolutely enormous benefits for American consumers. A&P deserves some of the credit for the fact that Americans now spend 7 or 8 percent of their incomes on food instead of 30 percent.
A&P’s success led directly to a social and political struggle over the role of size and efficiency in the American economy, which played out in decades of efforts to protect small retailers from chain stores. We in America tell ourselves that we like capitalism and free enterprise, but the truth is that we’re very uncomfortable with capitalism and free enterprise, because they result in people losing their jobs and businesses closing their doors. A&P offered a good way to explore that aspect of American history.
Do you find any lessons in the story of the rise and ultimate fall of A&P that modern-day retailers should apply to their own business strategies? Could more forward-thinking leaders have enabled it to evolve in order to survive and thrive?
There are a couple of obvious lessons for modern-day retailers. One is that the alternative to change is death. A&P thrived for so long because George L. and John Hartford remade the company at least four times, often over the opposition of their own executives. When the Hartfords died and their successors proved unwilling to change the business they had inherited, the company deteriorated very quickly. The other lesson is that chief executives shouldn’t choose their own successors. The Hartfords did, and things did not end well.
What grocery retail business leaders do you respect and/or admire? Why?
There are a couple of things that have always impressed me about the grocery business. One is that many foreign companies have entered the grocery trade in the United States, thinking that they could come in and apply their expertise to what they regarded as a relatively sluggish and inefficient industry. The list is long: Loblaw, Sainsbury, Auchan, [Groupe] Casino, Tengelmann, Ahold, Delhaize … Some of those companies came close to destroying themselves in the U.S. market, and most of them have departed. Despite the importance of national brands and global logistics systems, there is something uniquely local about the grocery trade. I admire the managers of some of these companies that have managed to grow and prosper by staying close to their customers.
Grocery stores operate on a thin margin, which of course affects their profitability and attractiveness to career seekers. Why do you think grocery retail could be an attractive career opportunity?
I think the grocery industry faces a real challenge today. The big companies have competed in good part by gaining economies of scale in distribution. But consumers increasingly want other things. They want alternative formats, so they don’t need to go to a supercenter to get a loaf of bread. And they want something different: local brands, locally grown produce, meat from an organic farm whose name and address is on the package, high-quality baked goods.
I think the big chain retailers are at a disadvantage in this environment, and I think there are a lot of opportunities for people who can figure out how to provide this sort of product diversity to customers while still maintaining the advantages of scale.
Have you ever worked in a retail establishment? What can you share about your experience?
I had a paper route when I was in junior high school. I recall that the paper gave us incentives to sign up new subscribers, not understanding that I didn’t want any new subscribers because I couldn’t fit any more papers in the basket of my bike. I’m very fortunate not to have stayed on that particular career path.
For more information on Marc Levinson’s book, The Great A&P and the Struggle for Small Business in America, read his full STORES interview.