The Technology That Changed Small Business

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.

When George and John Hartford died, however, they did not leave a good succession plan. The company was handed over to someone who had few entrepreneurial skills or incentives, and by 1960 it was declining rapidly. While the company still has about 300 stores, it filed for bankruptcy last year, a shadow of its former self. In short, Walsh’s story celebrates the success of entrepreneurs and decries the failure of caretaker managers.


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In Levinson’s view, A&P is the store that killed small business. By becoming so big, A&P was able to buy products in large quantities and sell them at lower prices than smaller competitors, giving it what some regarded as an unfair advantage. The fact that consumers benefited from chain stores’ low prices was ignored, just as WalMart opponents ignore the same fact today.

The notion that A&P, WalMart, or any other single company “killed small business” is dead wrong. A&P was only one of many chain stores that grew in the late nineteenth and early twentieth centuries. J.C. Penney, Kroger, Woolworth, Sears Roebuck, Kress, and Kresge all grew in the same time period. What allowed them to grow was not the sudden development of unscrupulous businessmen but new transportation and communications technologies that allowed companies to manage and distribute goods to large numbers of stores. If it were not A&P, it would have been some other store.

Moreover, rumors of the death of small business are premature. WalMart, after all, started as a small business facing competition from J. C. Penney, Woolworth, and all the other department and variety stores that existed in 1962 when Sam Walton opened his first store. Walton became successful by adopting new technologies such as satellite communications. Kresge survives today as K-Mart while Dayton’s Department Store survives as Target. But many of the once powerful chain stores Walton competed with, including Woolworth and Kress, are gone, not because of WalMart but because of their own failure to adapt to change.

The grocery industry itself has grown due to a series of innovations and technologies that didn’t exist in 1900. Yet many small grocers remain today, while other once-small companies, such as Whole Foods, have grown by filling niche demands.

Instead of blaming entrepreneurs for changes in the business environment that are actually the result of new technologies, existing businesses need to be ready to adopt those technologies. If they do not or cannot, then it is just as well they be replaced by those that can.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

29 Responses to The Technology That Changed Small Business

  1. Andrew says:

    I think if you ask most people, the thing they like least about Walmart is its carrying cheap foreign made crap that rapidly falls apart or breaks, and thus requires replacement.

    Low pries don’t do you any good when you have to buy a new item every six months or a year because of low quality.

    The quality of fabric used in clothing today is very low due to reductions in threadcount to “save” money, and we all know what kind of crap is passed off to our kids as toys nowadays, as they are usually quickly broken and sent to the trash. light appliances and kitchenware are another area of cheap dreck needing constant replacement.

    Walmart used to pride itself on carrying low cost high quality American made goods.

    http://walmart.3cdn.net/352867cdd512371521_lsm6bnt14.doc

    Its farcical to hold up the results of “trade” with a Communist slave state as paradigmatic of free enterprise, but nothing surprises me anymore with the posititions that might be taken by so-called conservatives, neo-liberals, and Republicans. Their ideology now is nothing more than whatever will make them the most money, with the objective morality of the actions and their affects on our country be damned.

  2. C. P. Zilliacus says:

    The Antiplanner wrote:

    Instead of blaming entrepreneurs for changes in the business environment that are actually the result of new technologies, existing businesses need to be ready to adopt those technologies. If they do not or cannot, then it is just as well they be replaced by those that can.

    Evolution exists in nature, in spite of what certain narrow-minded religious fundamentalists would want us to think.

    It exists in healthy societies as well.

  3. the highwayman says:

    Though CPZ, you’re narrow minded.

  4. bennett says:

    I have a lot of kin in small towns throughout Texas, particularly east Texas. When talking to old timers who used to own retail business on main street, many point to 2 factors as to why they closed their doors. 1st and foremost was a transportation planning fad that is still all the rage. Small towns were getting tired of semi trucks driving down main street all day and night so they built the “truck loop,” a highway loop that bypassed the downtown and went around the outskirts of the city. The problem was everybody, not just trucks, used the “truck loop” and people stopped coming downtown. Funny enough downtown is now vacant and all the new businesses have moved out to the loop, where all the heavy truck traffic is.

    Second, is Wal-Mart. They couldn’t compete and nor did they want to. Their aspirations were humble and old school. They didn’t want to run a mufti-national corporation. Interestingly enough, what they like least about Wal-Mart is not the competition but the experience as a customer. They reminisce about when retailers new your name, the products you used, and everyone had a store account. They miss customer service.

    When they owned the main street store there was the hardware store, the clothing store, the bakery, the butcher, and the cobbler. Now all the store fronts are empty and there is Wal-Mart (out on the loop). I don’t disparage Wal-Mart for their success, but the big box/super store/mall model didn’t just replace an older outdated retail typology, it replaced a part of American heritage. I suppose I just need to let go of my nostalgia, but it makes me sad. To me Wal-Mart (and the likes) is sad.

  5. Dan says:

    What Bennett said.

    DS

  6. Dan says:

    Though CPZ, you’re narrow minded.

    Not what THM said. Give ‘er a rest, son.

    DS

  7. Bennett,

    Calling something “a part of American heritage” is a substitute for thinking. The hardware store, clothing store, baker, butcher, and cobbler themselves replaced something that preceded them, and if you go far enough back they replaced making things at home. All are part of the American heritage, but that doesn’t mean Americans should all be raising and slaughtering our own animals and making our own shoes out of their hides and weaving clothes out of their fur.

    Andrew is right. WalMart sells lots of cheap, low-quality goods. Anyone who can’t compete against them by selling better quality goods lacks business skills, and I would hate to be captive to their shops because they used political muscle to keep WalMart out.

  8. bennett says:

    Mr. O’Toole,

    After I hit “submit comment” I knew this reply would be coming from someone. Let me explain further. I don’t disagree with your assessment (sans the “substitute for thinking” quip), I just don’t prefer the new model. Sure my choices in products have expanded, but having out of season produce is less important to me than other quality of life aspects. Obviously there are way more individuals out there the feel differently than I, and I would never expect that my preferences should outweigh market forces, but I still don’t have to like it. I’m not arguing that the big box model is inherently wrong, I’m just bitching.

    Also, I think it would do many Americans some good to slaughter an animal, frame a wall, make something useful for their household, or grow some food (not that their lives should be consumed with these activities). We have been becoming evermore distanced from the means of production in this country. IMHO, it would do a lot of people a lot of good to understand how that shirt got from the sewing machine to their back and the steak from the field (hopefully) to their table. There may come a day where all the comforts of the fast food nation that are being taken for granted will come back to haunt us (actually the haunt is on. see: service v. manufacturing).

  9. Dan says:

    Andrew is right. WalMart sells lots of cheap, low-quality goods. Anyone who can’t compete against them by selling better quality goods lacks business skills, and I would hate to be captive to their shops because they used political muscle to keep WalMart out.

    Yes, the question is: is a race to the bottom in wages actually good for people? When W-M first entered counties and the public welfare decreased (and public assistance and welfare rolls increased) due to the lowered wages, was this good? Did it strengthen our society? I think we know the answers that certain ideologies wish to prefer.

    DS

  10. Andrew says:

    The other problem with Walmart is the catchment basin that such a large store requires eating into our incomes in different ways – we have to drive further to get things, we require more transportation inputs (cars and roads) to get to these new places where we get things, and we have to spend more time to get to Walmarts and home Depots and the like to get things.

    When I was growing up, the hardware store was four blocks in one direction, the lumber and millwork store two blocks in another, the supermarket was five blocks away, a small neighborhood grocery was around the corner, there were multiple delis, the car repir garage was five blocks in a different direction, etc. There wasn’t a 30-60 minute round trip to get to these places, and you could walk to them if you wanted, meaning you probably didnn’t need two cars.

    Walmart might save you money at the counter, but it costs money in other ways.

  11. sprawl says:

    When I was a kid we lived outside of the city limits and it only took 7 minutes to get to downtown shopping. The same trip today often takes 30 minutes or longer for the same 6 mile trip.

    We we usually shopped at the local strip mall because they were only a mile or 2 away.

    I miss the days when we use to add capacity to our road system to relive congestion.

  12. Craigh says:

    “Its farcical to hold up the results of “trade” with a Communist slave state as paradigmatic of free enterprise, but nothing surprises me anymore with the posititions that might be taken by so-called conservatives, neo-liberals, and Republicans. ”

    What’s farcical is to claim that the American economic system is anything approaching free enterprise. Between the increasing regulation and the inflation-induced high wages and prices, it’s not hard to see why American consumers jump on relatively inexpensive imports.

  13. Sandy Teal says:

    Every change, from technology to city layout, has its benefits but also its cost. Those “inefficiencies” probably had some benefits to them.

    I have learned on this blog about some costs of automobiles that I never realized before. I hope the anti-car folks have realized how cars provide immense freedom and convenience that is important to most people’s lives.

    I would like to hear from people who have ridden on high speed trains. Is it the same experience as a slow train? Or is it much more like an airplane?

  14. prk166 says:

    Target always was a much separate store from the over priced, stogey traditional department store Daytons. I wouldn’t really say that Daytons survives. Daytons had Target under its umbrella but around a decade or a so years ago they pulled their heads out of the butt, changed the name to Target Corp and spun off the old Daytons to concentrate on where the money is ( then known as Marshall Fields as they had bought that Chicago dept. store chain and kept the bigger name ).

    To me that’s a pretty big deal when to survive a company manages to cast off what it used to be for what it could be. How many regional department stores chains out there toyed with the discount format but couldn’t make it work?

    In that sort of veign, more interesting to me are companies like Western Union or IBM.

  15. prk166 says:

    “When I was a kid we lived outside of the city limits and it only took 7 minutes to get to downtown shopping. The same trip today often takes 30 minutes or longer for the same 6 mile trip.” – Sprawl

    Unless you’re 80s, there isn’t a metro area in this country where you could’ve lived right outside the city limits, 6 miles from downtown, where now that same 6 mile stretch of freeway is so crowded that traffic never moves at a pace of more than 12 MPH.

  16. prk166 says:

    “I think if you ask most people, the thing they like least about Walmart is its carrying cheap foreign made crap that rapidly falls apart or breaks, and thus requires replacement.
    Low pries don’t do you any good when you have to buy a new item every six months or a year because of low quality.
    The quality of fabric used in clothing today is very low due to reductions in threadcount to “save” money, and we all know what kind of crap is passed off to our kids as toys nowadays, as they are usually quickly broken and sent to the trash. light appliances and kitchenware are another area of cheap dreck needing constant replacement.” -Andrew

    Sounds like a huge market opportunity. When are you opening your own store to take advantage of it?

  17. metrosucks says:

    I think Andrew wants the government to open a store for him. Government does everything best, and at the lowest prices, you know.

  18. sprawl says:

    prk166

    “The same trip today often takes 30 minutes or longer for the same 6 mile trip.”

    The key word is Often! Not always.

    And you missed my age by a mile.

  19. the highwayman says:

    Since it’s Thanks Giving, I’m wondering if any of you autoholics are thankful of big government for providing free roads for you to drive on?

  20. Sandy Teal says:

    I am thankful for the road in front of my house. Not only did it allow all the supplies and people to build my house, and me move my stuff here, it also made possible access to my house for:

    sewer
    water
    cable tv
    internet
    phone
    electricity
    gas
    trash collection
    school bus
    postal service
    delivery service
    police
    fire
    ambulance
    trick or treaters
    Jehovah Witnesses

    I could get by without one of them or so. But I don’t see much of a life if my family had to walk 2 miles to the nearest railroad track for all those services.

  21. the highwayman says:

    Then why do you want to deprive others of their liberty?

  22. Dan says:

    The majority of local access roads and their Rights Of Way in this country are paved and maintained out of funds from the General Fund. The General Fund receives revenue from several and various taxes forcibly taken from rugged individuals who will never use the road in front of Teal’s house. Maybe the road is a public good, benefiting the collective, as are the trees, which benefit the commonweal as well by their metabolic processes, in addition to raising the property value of Teal’s house and his neighbors.

    DS

  23. the highwayman says:

    Though Dan, that would mean Teal understanding that world doesn’t revolve around him.

  24. metrosucks says:

    Of course, everyone benefits from roads, but Dan still implies it’s bad for tax dollars to build roads, but somehow OK for the same tax dollars to build gold-plated rail systems that hardly anyone will use and almost no one will benefit from. Yep, makes perfect sense.

  25. Dan says:

    Dan still implies it’s bad for tax dollars to build roads, but somehow OK for the same tax dollars to build gold-plated rail systems

    When one makes dishonest assertions, it is a good indicator that one is out of ideas, if one has any at all.

    DS

  26. Sandy Teal says:

    I listed 14 services that city, state and federal governments or quasi-government utilities provide to most homes in the US that are greatly facilitated by, if not require, a road.

    Thus I am not surprised that governments provide for roads out of general funds rather than try to apportion the costs among 14 different service budgets. Local roads and their rights of way are just necessary for a wide range of benefits, even if the residence do not drive.

    I don’t disagree with Dan that trees also provide external benefits. But all else being equal, properties/townships/regions with road access and no trees are worth a heck of a lot more than properties with trees and no road access.

  27. Dan says:

    I’m merely pointing out, Sandy, that people are frequently taxed for things they don’t use. This is either OK or it is not. If public goods of one sort are OK, which public goods are not?

    DS

  28. metrosucks says:

    I’ll tell you what, so-called public goods, like light rail, streetcars, and high speed rail (outside of the NE corridor), that are really just subsidies to developers or favored groups.

  29. the highwayman says:

    The same can be said about roads, every thing in life is cross subsidized one way or another.

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