The Antiplanner hasn’t finished reading Marc Levinson’s The Great A&P and the Struggle for Small Business in America, but the story he tells is essentially the same as that told by former A&P executive William Walsh in The Rise & Decline of the Great Atlantic & Pacific Tea Company, a book the Antiplanner discussed nearly three years ago. Despite the similarities, the two writers have very different slants, one essentially pro-capitalist and one subtly anti-capitalist.
To Walsh, A&P is a classic American success story. Founded by George Hartford as a tea shop in Manhattan in 1859, the company was grown by his children, George and John, to more than 16,000 stores that dominated the grocery trade in much of the United States. The average store was small by today’s standards, selling only 400 to 500 different products. When the first supermarkets were developed in the 1930s, the Hartfords jumped on the bandwagon and quickly replaced their shops with a smaller number of much larger stores. Like WalMart today, A&P in the 1930s through the 1950s was considered an unstoppable juggernaut.
A retailer develops a new format for distributing and selling products that turns out to be wildly successful. Spreading like a juggernaut across the country, the company goes from being an insignificant regional chain to the world’s largest retailer in little more than a decade, leading frantic competitors to seek protection through government regulation.
Walmart in the 1990s? Could be, but I am specifically referring to the Great Atlantic & Pacific Tea Company (A&P) in the 1910s and 1920s. Founded by George Huntington Hartford, he left the company in trust to his five children when he died in 1918. Two of those children, George Ludlum and John Augustine Hartford, led the company through its growth years.
November 13, 1950 cover of Time. Note the gold chain around the photo representing A&P’s position as the largest chain store in the world. (Click for a larger image.)
George was the financial manager; John was the innovator who developed the “economy store” (a tiny cash-and-carry store run by only one clerk) in 1912, which multiplied into nearly 16,000 stores by 1930. When supermarkets became popular in the 1930s, John designed A&P’s first supermarket and over the next fifteen years built nearly 5,000 more, closing several economy stores for each supermarket opening.
Last week, the Antiplanner examined the American grocery industry. That post showed that you can find at least ten different classes of grocery stores (if you count Jungle Jim’s as its own class), ranging from about 2,500-square-foot convenience stores to Jim’s 250,000-square-foot behemoth.
If some government agency tried to plan the distribution of groceries to all the households in the country, how would they do it? Would they come up with a system that offered towns as small as 1,500 people access to 30,000 different products in one store? Not likely.
We know that, in the centrally planned Soviet Union, the typical grocery store of the 1980s featured only about a dozen different products on its shelves at any given time. To buy something from one of these stores, customers had to stand in three lines: one to order the product, one to pay for it, and one to pick it up.
Fortunately, no one in America planned our system of grocery distribution. Instead, today’s supermarkets and supercenters are the product of more than a century of grocery evolution. Many of the key ideas found in today’s grocery stores can be traced to individual entrepreneurs, but it is likely that if one entrepreneur had not introduced each idea, someone else would have a year or two later.
The big news in Sisters, the nearest town to the Antiplanner’s exurban home, is the grand opening of a new 43,500-square-foot Ray’s supermarket. The new store is more than 50 percent larger than the one it replaces and new features include a “wine cellar” with 2,200 different kinds of wine; an olive bar; and a bulk-food section with hundreds of different grains, flours, and spices.
These things may not seem impressive to people living in big cities, but Sisters’ population is only about 1,500 people. As one customer gushed, “you feel like you’re walking into a Safeway,” but then you remember, “This is Sisters.”
The new store probably carries at least 30,000 different products — known in the retail industry as stock-keeping units or SKUs. Yet this is only in the middle of the full range of food store offerings in this country.
J.C. Penney was, in many ways, the Sam Walton of his age. While many of Penney’s chief competitors came from the big cities — Sears and Montgomery Wards started in Chicago, Macy’s started in New York City — Penney, like Walton, began in a small town in a backwater state.
James C. Penney at about the time he started his first store in 1902.
From there, he built Penneys into the nation’s largest drygoods chain. By the 1920s, Penneys was able to advertise itself as a “nationwide institution.” Before Penney died in 1971, there were nearly 1,700 Penneys stores, and his company also owned the Thrift Drug chain, a discount chain known as The Treasury, and had 1,400 outlets to its catalog store.
What made entrepreneurs like Henry Ford, James J. Hill, Henry David Thoreau, and Henry J. Kaiser so successful? Thoreau, of course, is a special case as he only dabbled at being an entrepreneur, so the Antiplanner’s answer to this question will focus more on the other three.
Ford, Hill, and Kaiser had three characteristics in common (most of which Thoreau lacked). First, they were absolute workaholics. All of them worked long hours for at least six days a week for almost their entire adult lives. Hill and Kaiser were working on entrepreneurial projects up to a few days before their deaths; Ford quit only because he was getting senile and his wife made him turn the company over to his grandson, Henry Ford II.
For parts I, II, III, and IV, see Henry J. Kaiser, Entrereneur, Henry J. Kaiser: The War Years, Henry J. Kaiser, Industrialist, and Henry J. Kaiser, Hawaiian Booster.
Henry Kaiser created an empire worth tens of billions of dollars and earned a personal fortune of $2.5 billion. Yet he is almost forgotten today. On his death, he divided his fortune between his second wife, Ale, and the Henry J. Kaiser Family Foundation, which was created to support the Kaiser medical program. His son, Edgar, received nothing because he was “otherwise cared for.”
Edgar replaced his father as chairman of the various Kaiser companies. But his personal investments in these companies was small, which may be why he was unable to keep the companies going. Edgar probably had a net worth of about $50 million, which is insignificant compared with Henry’s worth.
For parts I, II, & III, see Henry J. Kaiser, Entrereneur, Henry J. Kaiser: The War Years, and Henry J. Kaiser, Industrialist.
Late in life, Henry J. Kaiser became one of the earliest and biggest boosters of the Hawaiian tourist industry. He built the territory’s first destination resort, the Hawaiian Village Hotel. He built a large housing development named Hawaii Kai. He encouraged the airlines to increase flights to Hawaii. And he bought television and radio stations, both in Hawaii and on the mainland, to promote tourism.
Kaiser’s Hawaiian Village resort in the early 1960s. The pink on the right are catamarans; the radio tower at left is probably for Kaiser’s station, KHVH.
Because of his cement interests, Kaiser had visited Hawaii before the war, but — ever the workaholic — he wasn’t much interested in vacationing. In 1951, however, his wife Bess died. Less than four weeks later, Kaiser stunned his colleagues and shocked Oakland social circles by marrying Bess’ nurse, who was just half his age. Alyce “Ale” Kaiser opened his eyes to new ventures and ideas.
For parts I & II, see Henry J. Kaiser, Entrereneur and Henry J. Kaiser: The War Years.
As early as 1942, Henry J. Kaiser publicly worried that the end of the war would see a return to depression conditions, particularly in the West where most of his operations were located. As Mark Foster, one of his biographers, notes, “Kaiser felt a deep personal responsibility for helping maintain prosperity after World War II, particularly in the West.”
Kaiser Industries headquarters in Oakland.
Henry J. Kaiser owned a profitable cement business and a thriving steel operation. While expanding these businesses after the war, he also quickly moved to enter several new industries, including autos, housing, and aluminum. While he certainly hoped to profit in these industries, he also saw them as a way to promote the region’s economic growth.
For part I, see Henry J. Kaiser, Entrereneur.
In 1940, Henry J. Kaiser joined with the Todd shipbuilding company to bid on a contract to build 60 merchant ships for the British government, which desperately needed ships to import supplies during the war. Todd would build half the ships in its East Coast shipyards, while Kaiser would build the other half from a yet-to-be-built shipyard in Richmond, California.
Kaiser’s Oregon Shipyard on Swan Island in Portland.
Kaiser, of course, had never built either a ship or a shipyard in his life, but that didn’t faze him. When he told British and, later, American officials how fast he thought he could build ships, they thought he was delusional — no one had ever built ships that fast. Yet he revolutionized the shipbuilding business, bring assembly line techniques to an industry used to custom, one-off designs.
With the help of other members of the Six Companies, Kaiser built seven shipyards in Portland and Richmond capable of building 58 ships at one time. By the end of the war, these yards had built 1,490 ships, an average of about one per day. Most of the ships were the type of merchant ship known as Liberty ships. But Kaiser also built 12 other kinds of ships, including troop transports, landing ship tanks, and escort carriers. In all, Kaiser supplied more than a quarter of all U.S. ships built during the war.