When America First Stood Up Against Giant Retailers

When America First Stood Up Against Giant Retailers

Shoppers at an A&P.

SourceAlfred Eisenstaedt/Getty

Why you should care

Because it takes a lot to slay a commercial giant, especially a beloved one.

This OZY series introduces you to the firms and people who’ll control the future economy.These companies will soon dictate what you buy and for how much. Get to know them, with this OZY original series.

In the face of widespread popular protests backed by several powerful legislators, a giant retailer steps back, at least for the moment. This could be the story of Amazon in New York City in 2019. But this is a story from nearly a century ago when Americans first rallied against a massive retail chain that was threatening the local economy. The company? Great Atlantic and Pacific Tea Co. (better known as A&P).

In the early decades of the 20th century, long before Amazon, or even Walmart, A&P stores spread rapidly across the U.S., threatening to take over the retail landscape and put thousands of mom-and-pop stores out of business. Unsurprisingly, the backlash this provoked was intense. “I would rather have thieves and gangsters,” the powerful populist politician Huey Long proclaimed, “than chain stores in Louisiana.” It was that kind of sentiment that very nearly led Congress to take a legislative step in the late 1930s that would have changed American consumer history irrevocably: a ban on chain stores.

The anti-chain movement faded away because Americans saw the advantages of chains.

Marc Levinson, author of The Great A&P and the Struggle for Small Business in America

Going to the local corner grocery store in early-20th-century America was not really as charming an experience as it sounds. The product selection was extremely limited. Staples like meat and bread required separate trips to the baker and the butcher. And prices were high. In the 1920s, the average working-class family spent nearly a third of its budget on groceries, more than it spent on rent. “Food distribution was very inefficient, and families paid for that inefficiency through high prices,” says Marc Levinson, author of The Great A&P and the Struggle for Small Business in America.

In short, the grocery business was ripe for disruption, and that disruption came in the form of two brothers, George and John Hartford, high school dropouts who transformed their father’s small chain of stores into a corporate behemoth. A&P opened approximately seven new stores every day in the early 1920s. The typical A&P had limited hours and a single store manager. But the biggest cost savings came from the stores bypassing wholesalers and buying straight from manufacturers. Savings were passed on to consumers, who were also given an increasing variety of options to choose from.

Gettyimages 53378656

A&P shoppers in 1901.

Source Alfred Eisenstaedt/Getty

It was natural that a backlash from those threatened by A&P’s growing dominance would form — and a powerful one did, known as the anti-chain movement. Independent grocers united with everyone from progressives and women’s groups to the KKK and populist Southerners like Huey Long to oppose the perceived takeover of America’s Main Streets. Newspapers and radio stations were devoted to the David vs. Goliath narrative, 26 states passed taxes on chain stores, and Congress passed the Robinson-Patman Act in 1936, making it largely illegal for manufacturers to give big chains preferential prices. Wright Patman, the folksy Texas congressman and anti-monopoly crusader behind that law, hoped to go even further, advocating for a “death tax” bill in 1939 that would have made business prohibitively expensive for chains.

The death tax bill, however, never came to a vote, and its failure signaled the demise of the anti-chain movement. Part of the reason for this was a massive, piecemeal A&P-led lobbying effort to kill the bill in which each anti-chain constituency was swayed one at a time. Also working in A&P’s favor was the growing popularity of chains with consumers, including its own positive reputation with customers, which only increased with the advent of the mass-consumption economy following World War II. “The anti-chain movement faded away because Americans saw the advantages of chains,” says Levinson. “While people paid lip service to the mom-and-pop store at the corner, by the end of World War II, they were doing most of their shopping at A&P and Sears and Montgomery Ward and J.C. Penney.” A&P eventually fell though: It shuttered in 2015 after what critics at the time called a failure to adapt and modernize.

As modern-day giants like Amazon, Walmart and Google gain oversize market positions thanks to their own low prices and market clout, anti-monopoly forces are again aligning to combat their growing influence. And such giants can borrow a number of pages from the A&P resistance playbook, including hardball tactics like political lobbying — in fact, reports in recent weeks indicate that the Federal Trade Commission and Justice Department are preparing antitrust probes of Google and Facebook. But there are also softer powers that can be just as effective. To understand how A&P survived, says Levinson, one should watch the 1931 Little Rascals short Helping Grandma, in which the nice men from the chain store save a sweet grandmother from a swindler. “Walmart and Amazon would probably benefit from watching it,” Levinson says.

OZYFlashback

Tales from the past to titillate and educate while giving you a lens on the present and future.