An Interview with Marc Levinson

Marc Levinson, economist, historian,  journalist and author of "The Great A&P and the Struggle for Small Business in America"
Marc Levinson, economist, historian, journalist and author of
“The Great A&P and the Struggle for Small Business in America”

With reporter skills honed as a business reporter at Time Magazine and as a Finance & Economics editor at The Economist, and with an understanding of how large corporations function gained from developing research and analysis inside top financial institutions, Marc Levinson was uncommonly qualified to write the unique story of both the A&P chain and the curious and mysterious brothers who made it the most powerful retailer of its day. That A&P virtually collapsed upon their deaths, and that we are currently watching entities as different as Amazon and Wal-Mart vie to be its successor only makes the story that he tells in “The Great A&P” all the more compelling. Marc graciously agreed to sit down with us to discuss his book, retailing, and the future.

in the beginning

Agency Review:

It would seem to me that a writer might take any number of ways into the A&P story. One might enter it by looking for a historical parallel to Amazon and Walmart that might provide some insight to those retail behemoths. Or one might have simply been intrigued by a company that experienced the highest highs and lowest lows of American retailing. Or perhaps one could see the parallels between the retail experience in 19th century America and what’s going on in 21st century China and was curious what lessons might exist. Or maybe A&P just held some personal fascination. So where did you start with the “The Great A&P”? What was your way in and how much of the story did you know when you began?

Levinson:

My idea at the beginning was quite different: I wanted to write a dual biography of two brothers, now all but forgotten, who played important roles in the development of American business. John A. Hartford, the younger brother, may have been the shrewdest and most insightful marketer ever to live, and had an extraordinary way of sensing societal changes and figuring out how the family company ought to adapt to them. George L. Hartford, the older brother, was far less imaginative and inventive, but he was a financial genius who kept this huge company on a solid footing. The problem I ran into was that I could find almost no personal records relating to George. How does one write a biography of an extremely wealthy corporate executive who avoided talking to anyone save his brother, rarely appeared in public, and spent his evenings doing jigsaw puzzles? It became clear that the biography idea wouldn’t work, so I turned to a narrative history.

Agency Review:

Fair enough – I thought I had all the possible angles covered, but that just goes to show you… But what’s curious about what you say is that they were all but forgotten. Okay, so how did YOU know about them? Because in the current business literature, A&P are, as you know, barely a footnote – and the brothers Hartford less than that. And how much did you know before embarking on this journey and why? And finally, at what point did you realize that it wasn’t simply a matter of not being able to find the info on George, it was that there wasn’t any to find? Because I have to believe that for a journalist like yourself that absence of information was as challenging as it was puzzling.

Levinson:

In one of my previous lives I had done investment-related work on supermarkets. A&P was a publicly traded company then, and its structure was unlike that of any other major grocer. Most food retailers tried to concentrate their stores to gain economies of scale in advertising and warehousing. A&P, in contrast, had half a dozen stores in Baton Rouge, a few more in Toledo, a couple in Richmond. When I looked into why the company had this bizarre configuration, I began to learn a bit about its history, and that brought me to the Hartford brothers. But it’s often the case that when you dig into a subject you discover a lot of interesting things. That’s why I enjoy writing history.

I spent an afternoon in the public library in Montclair, New Jersey. George L. Hartford, one of the richest men in America, lived in Montclair for half a century, but I could barely find any mention of him in any local sources. Unlike other wealthy local men, he didn’t head local organizations, sit on local committees, make publicized donations to local charities. Perhaps he left letters or photo albums, but I had absolutely no success locating them.

tea companies

Agency Review:

It’s always curious where innovation comes from and how companies evolve from their beginnings. Apple starts by putting computers on desktops and now it’s a phone and music and god knows what else company. Amazon starts by selling books and now they’re creating APIs and cloud computing capabilities for half of the web. Heck, even Nokia started out as a lumber company (a business they may want to consider going back to, actually). A&P started, as you point out, as a tea company and indeed, you list several of the great grocery chains that started specifically in the tea business – Kroger, Acme, Grand Union to name a few. But why? What was it about that particular business that evolved in that particular way at that particular time and what do you think that tells us?

Levinson:

Tea and coffee were widely used and had large mark-ups, and the system for distributing them through the country wasn’t very efficient in the late nineteenth century. It wasn’t hard for specialists in distributing and marketing tea and coffee to make a profit. The problem these companies faced was that it was difficult for them to expand into other products, because there was no such thing as packaged foods. Grocery stores sold things like cheese and pickles and molasses, but they were all sold as unbranded commodities, and the chains had no advantage in selling them. Some important technological innovations came about in the 1890s, such as new canning techniques and the invention of a method for making corn flakes. These products could carry labels with brand names that lent themselves to advertising. It was an easy step for the tea and coffee companies to begin selling packaged foods and turn themselves into grocery stores.

Agency Review:

So in other words, looking at tea merchants as, well “merchants of tea” is sort of like looking out the wrong end of the telescope. They were merchants, and the most efficient product for them to sell was tea. Much like Amazon started out as a bookseller because it was the most efficient product to sell – though its model was really just a more efficient way to sell everything. These merchants, who were not just tradesmen with cash registers in the way butchers or cheesemakers were (that is, men who were experts at making the product and who sold it where they made it), were really a new kind of businessman with a new kind of business – who, to your point, were just waiting for the invention of packaged goods to make them successful (whether they realized it or not).

Levinson:

My research indicates that around the beginning of the Civil War, when A&P got its start, most of the wholesale merchants in New York were specialized. Some dealt cotton, some handled potatoes, A&P and many others sold tea. My guess—I have no hard information on this—is that the company discovered pretty quickly that selling a single product made it vulnerable to fickle consumer tastes and to changes in government policies, such as tariffs. Diversification made sense, but only if it was economical. A&P first added sugar and spices, which could be stored in tins and sold by the pound, just like tea. It expanded into other products, but carefully. George L. Hartford didn’t like tying up money on inventory. If a product didn’t sell he didn’t want it clogging up his shelves.

national v. regional

Agency Review:

One of the strangest things about the A&P story is how vilified the company was for being a national company even as America was, in many ways moving from a regionally-centric nation to a nationally-centric one. In a way, this echoes the Federal Government v. States Rights arguments that this country has been having since 1787 but there’s a much more immediate contradiction that I cant quite resolve and was wondering if you could help me with. It has to do with World War II. How was it that no one in government could see that an organization that could mobilize massive quantities of food across the country incredibly efficiently and at virtually a moment’s notice might be quite valuable during a war that everyone saw coming. Indeed, how did they not see it even as the government itself was creating similarly nationally-organized programs?

Levinson:

Actually, that lesson was learned in World War I, when there was a great deal of concern about the inefficiency of the food distribution system. Americans were told to eat oat bread instead of wheat bread so more wheat could be shipped to feed starving people in Belgium, and yet enormous amounts of food were going to waste. The efficiency of A&P was widely noted, and I think it was one reason the company was able to expand with almost no opposition during the war years.

Agency Review:

Okay, then let me pivot a bit – how much of what A&P got painted with was really part of the larger “local control v. national control “argument that America has been having for almost as long as America has been around – an argument that really has nothing to do with jobs or outsiders and everything to do with the very real power struggle that was being played out across America in all forms. In other words, how much was just zeitgeist that A&P got blamed for?

Levinson:

You’re right. Remember that A&P had more than 16,000 stores by the end of the 1920s. It was extremely visible, and that made it a ready target for advocates of local control. In that respect, it’s worth recalling that Congressman Wright Patman of Texas, A&P’s great foe in the 1930s, went on to become chairman of the House Banking Committee in the 1960s. He used that position to support small-town banks and attack big banks—again, favoring local control of business.

the cusp of consumerism

Agency Review:

While you respect the fiscal responsibility and caution of George, clearly the hero of the book is his brother John whose genius for marketing and branding, and above all his ability to understand how the market and consumer were changing and how A&P needed to respond in order to succeed is really remarkable. And one can’t read of his unexpected death and the subsequent decline of the company he and his brother built without wondering what he would have done to adapt to the explosion of consumerism that was just starting. Now, you lay out quite clearly what A&P did wrong, structurally and strategically, that led to their demise. But the structural issues (the board and stockholders and corporate governance issues) would not have been an issue for John. So what do you think he would have done strategically had he lived into the 1950s and maybe even 1960s?

Levinson:

This is hard to say. John was 79 years old when he died in 1951. Had he lived longer, it’s hard to imagine he would have been as active in his 80s as in younger years. There are two big strategic moves he could have made during his lifetime. One was to work with his relatives to develop a plan for the company’s future; he knew that the trust he and George controlled, which owned all of A&P’s shares, would be dissolved upon his and George’s deaths, and perhaps they could have reached an agreement with their nephews and nieces that would have avoided the need to take the company public. The other move would have been to infuse new blood into management after World War II, so leadership might have passed to a successor with fresh ideas instead of one whose tenure with the company stretched back to the days of horse carts. For all his enormous achievements, John failed at these two tasks.

Agency Review:

I don’t disagree with any of that, but I’m thinking more about what a marketing genius John was and how you think he, as a marketer and with the full force of A&P at his back, would have responded to the explosion of consumer of the 1950s. Would he have seen the flight to the suburbs of the middle class as the future and would he have re-oriented A&P towards them? Or would he have figured out a way to maintain an urban presence – and potentially averted the complete lack of food retailing that we now see in inner cities (with the related epidemics of obesity, malnutrition and diabetes that are now rampant there)? Or do you think these were changes that would have been beyond him? It happens to even the greatest geniuses.

Levinson:

The history shows that John continually challenged his managers and warned them against becoming too set in their ways. I have to believe he would have pushed to company to follow its customers to the suburbs. And I think he would have been far more aggressive about closing dowdy old stores.

phantom limb

Agency Review:

It occurs to me that what you describe as the central way that A&P drove down prices – by cutting out the middle man and by bringing efficiency to the retail experience – is how most consumers still think that lower prices are achieved by Walmart or Amazon or the outlet stores. But as Ellen Ruppel Shell demonstrates in her estimable book “Cheap”, that’s not really the case any more. Today, by and large, savings for consumers comes from squeezing supplier margins, moving production to subsistence wage locations, creating the illusion of discounted prices through elaborate markdown marketing, providing loss-leaders and door-busters, making shoddier products, and a thousand other tactics that have nothing to do with the efficiency that the Hartford brothers lived by. Which begs two questions: first, do you think that’s an accurate analysis of the difference between A&P and current retailers; and second, is that trend reversible or are we doomed to cheaper and shoddier crap from poorer and poorer nations?

Levinson:

A&P prepared the way for Wal-Mart when it comes to driving down supply costs. A&P knew what it should cost to pack a six-ounce can of sardines or a pound of macaroni, and it had no inhibitions about telling suppliers that they had to meet its price or it would not order from them. On the other hand, by placing large orders and setting delivery dates well in advance, A&P enabled its suppliers to operate more efficiently. Many of them testified that they received lower prices when they sold to A&P, but that they still made good profits. I would point to a different problem with consumer goods manufacturers today, and that is that they have lost the ability to convince shoppers that more expensive goods are of higher quality. I think of a company whose shoes I used to buy. In the 1990s it started selling shoes from Mexico and China. The company was still trying to extract $200 for a pair of supposedly high-quality shoes at the same time it was peddling $35 shoes. My reaction was: how do I know that their high-priced product is any better than their new, shoddy, low-priced product? I haven’t bought a pair of shoes from them since.

Agency Review:

What’s curious to me about your example of the shoes is how it echoes the challenge you describe that faced the customers of tea merchants in the 19th century. Were these pickles just as good as the pickles down the street, but at a better price? Or were they shoddier pickles and THAT’s why they were cheaper? The idea that branding is a form of insurance is, frankly, a fascinating one, and I guarantee not the way that brand managers, marketers, or advertising agencies are thinking of it.

That said, how do we fix this problem of trust? Because while I think we can trace the method back to A&P, I don’t think we can lay the current madness at their doorstep. People don’t trust brands, companies, advertisers. During A&P’s heyday, people trusted their brands beyond logic and reason. Can we get that back? Or is the consumer hopelessly poisoned?

Levinson:

There are successful companies that build their businesses around trust. Just to stay with food retailing, consider what people say about Costco or Trader Joe’s. When a new product shows up in Costco’s refrigerator case, shoppers are willing to try it because they believe Costco has verified its quality, whether or not that is actually the case. Shoppers would not have the same expectation of many other retailers. But there’s a real burden on brands and on retailers to deliver what they promise. Many of them don’t come close. Perhaps the worst are the auto manufacturers, who spend billions of dollars on commercials touting what a great experience you’ll have at their dealerships. Anyone who’s ever set foot in a dealership knows that the experience is not remotely close to what is advertised. That does not build trust.

You can read our review of Marc’s book here, or order it from Amazon here or from Barnes & Noble here – or pick it up at your local bookseller (find one here). Or you can reach out directly to Marc here.

Illustration of Marc Levinson by the brilliant Mike Caplanis

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