Book Review: The Great A&P and the Struggle for Small Business in America by Marc Levinson

I have recently finished historian and economist Marc Levinson’s masterful The Great A&P and the Struggle for Small Business in AmericaWhile the story focuses largely on two brothers, John & George Hartford, and the rise of grocery chain they managed with great skill, readers will also learn much about the fascinating history of food retail.

Mr. Levinson artfully describes the impacts of major innovations on the industry, such as refrigeration,  which transformed the ways in which grocers were able to stock and store perishable items, and the automobile, which liberated shoppers from the limitations of purely local shopping choices.

However, I must confess that my favorite example is the lowly cardboard box, which, Mr. Levinson notes, was ‘discovered’ by accident – the employee of a paper bag manufacturer set the blades incorrectly on a batch of paper bag cuts – and allowed for a “cheap, convenient form of packaging…that could be decorated with pictures, logos, and brand names.”  It was a seminal moment that helped give rise to the branded goods that are still widely known even today.

One of the major themes of Mr. Levinson’s book, of course, is the conflict that arises when major retail chains such as A&P, which through their superior efficiency and scale offered consumers low prices that that small proprietorships could never hope to equal, begin to be targeted by ambitious politicians such as Texas Congressman Wright Patman, who portrayed himself as a guardian of small business, and the retail chains as a menace to prosperity.

The Great A&P is, at its core, an economic history book, but it is also an excellent business book as well.  Readers will learn a great deal about how the Hartford brothers were revolutionary in their vision for A&P, guiding it to become the world’s largest retailer, a position it would not relinquish for several decades.  Mr. Levinson, notes, however, that the two brothers failed to inculcate sufficient resilience within the firm to guide it once they passed on; indeed, the story of A&P after the deaths of the two brothers is one of failure to adapt and subsequent decline.

Mr. Levinson ends his story with analogies to Walmart and Amazon, and a provocative discussion of what really constitutes a monopolistic advantage in industry.  As Mr. Levinson notes, in the digital age, when consumers surrender personal information to vendors even while enjoying their low prices, the concept of monopolistic market power and how it is exercised should be expanded beyond the prices consumers pay for goods and services.

I reached out to Mr. Levinson to answer a few questions about A&P, the grocery business, and the current feeling toward big business in America.  He was kind enough to answer in detail:

During the golden years of A&P, the close control with which the Hartford brothers managed the firm seems like a distinct advantage as they kept a focus on the long-term health of the company, whereas a more widely owned firm might have been tempted to take a more lucrative approach in the short-term.  However, once they passed on and the firm fell into the hands of less skilled operators, the firm began its long decline.  Do you think there is a lesson there?  In other words, should the brothers have anticipated that they could not run the firm forever, and inculcated a better culture for those who would ultimately be running it long after them? 

ML:   One of the lessons of the A&P saga is that it can be dangerous to choose your own successor, as the Hartfords did. Another is that while it’s important to have managers who understand the firm and its culture, a firm can become too ingrown. At the time of the Hartfords’ deaths, all of A&P’s top managers had worked for the company for several decades, and they had a poor understanding of how the world was changing. Some fresh blood would have better prepared the company for the post-Hartford era.

Kroger is an example of a major grocery chain that was a contemporary of A&P’s, but which is still thriving today, behind only Walmart in terms of annual retail sales.  You detail at length the missteps A&P suffered after the deaths of the Hartford brothers.  Have you studied at all how Kroger managed to avoid those same mistakes and how it has managed to adapt and survive even in the digital age?

ML:   I have not studied Kroger in detail. One important difference between the two companies, though, is that A&P very rarely acquired a store, much less an entire company. Kroger, in contrast, has expanded over the years mainly through acquisitions. Those acquisitions potentially bring fresh blood into corporate management, and that’s likely to Kroger’s benefit.

Given the rise of the various megacap technology firms, and how much of our everyday lives with which they are involved, why do you think there is so much less pushback against them then there was, for example, against A&P?  Is it because Americans are more comfortable with big business now than 100 years ago, or are we, as your final chapter seems to suggest, perhaps blind to what constitutes real monopolistic power?

ML:  We seem to be in the early stages of a discussion of corporate power in the United States. Certainly, Americans are more comfortable with big business than they were a hundred years ago, but they have also been fed an ideology that there’s nothing wrong with big businesses unless they are blatantly fixing prices. There is a move back to a broader understanding of how corporate power can affect society, and that may have consequences for tech firms as well as firms in other industries.