Great Atlantic & Pacific Tea Company, Inc. (A & P)

Product Details

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Historical Context

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The Great American Tea Company was founded in 1859 as a mail order business by tea and spice merchants George Huntington Hartford and George Gilman. The first store was opened in 1861 in New York City at the corner of Manhattan's Broadway and Grand Street selling various teas and coffees.

In 1870, the company is renamed The Great Atlantic and Pacific Tea Company, in honor of the transcontinental railroad. By 1876, with 100 stores, A&P becomes the nation's first major grocery chain.

In 1912, the first Economy Store (a new grocery store concept with a limited product assortment) is opened in Jersey City, New Jersey. In 1924, the A&P Radio Hour becomes America's first national radio program.

By 1930, A&P dominates the supermarket business and introduces private label products at substantial savings to customers.

A&P's decline began in the early 1950s, when it failed to keep pace with competitors that opened larger supermarkets with more modern features demanded by customers. By the 1970s, A&P stores were outdated, and its efforts to combat high operating costs resulted in poor customer service.

In 1975, it hired outside management, closed older stores, and built modern ones. When these efforts failed to turn A&P around, the heirs of the Hartford family and the Hartford foundation, which owned a majority of the stock, sold to the Tengelmann Group of Germany.

In 1981, A&P launched its second store-closing program financed by the surplus assets of its employee pension plan, reducing the corporation to fewer than 1,000 stores. The plan also closed manufacturing operations except coffee production.

Starting in 1982, A&P acquired several chains that continued to be operated under their own names, rather than being converted to A&P. While A&P regained profitability in the 1980s, in 2002 it operated at a record loss because of new competition, especially from Walmart. A&P closed more stores, which included the sale of its large Canadian division. A&P also spun off Eight O'Clock Coffee, the last of its manufacturing units.

In 2007, A&P purchased Pathmark, one of its biggest rivals, and A&P again became the largest supermarket operator in the New York City area. At the same time, Tengelmann reduced its shares to 38.5%, while the private equity firm Yucaipa, as major shareholder of Pathmark, acquired 27.5% of A&P's shares.

Highly leveraged after the Pathmark acquisition, A&P experienced financial difficulties because of the recession and filed for Chapter 11 protection in 2010, in the United States Bankruptcy Court in White Plains, New York. By the time of its filing, A&P had declined from the nation's largest grocery retailer to the 28th, with operations limited to the Northeast.

In 2012, A&P emerged from bankruptcy by becoming a private company, as Tengelmann ended its holding, and briefly returned to modest profitability in 2013 and 2014.

A&P had been for sale in 2013 but could not find a suitable buyer. After declaring a loss in April 2015, it filed for its second Chapter 11 bankruptcy on July 19 of that year. All of its supermarkets were sold or closed by November 25, 2015, and the closure of the Best Cellars Wines and Spirits stores followed shortly thereafter, with those stores auctioned in August 2016.

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