Lehman Brothers Collection - Contemporary Business Archives

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Twentieth-Century Business Archives

The Great Atlantic & Pacific Tea Company, Inc. - Lehman Brothers Collection

The Great Atlantic & Pacific Tea Company, Inc.

List of Deals

The Great Atlantic & Pacific Tea Company arose from the partnership created in 1859 between George Huntington Hartford and George Francis Gilman. Using Gilman's connections as a grocer and son of a wealthy ship owner, Hartford purchased coffee and tea from clipper ships on the docks of New York City. By eliminating middlemen, the partners were able to sell their wares at "cargo prices." This venture was so successful that in 1869 Hartford and Gilman opened a series of stores under the name Great American Tea Company.

The company's success was largely due to its innovative strategy of offering savings and incentives to the consumer. Its "club plan" offered an additional one-third discount for customers who formed clubs to make bulk mail-order purchases. By 1886 hundreds of such clubs had been formed. The company pioneered the idea of private labels and house brands; Great American Tea introduced its own inexpensive tea and coffee blends, including the popular "Eight O'Clock" blend.

In 1869 the company changed its name to the Great Atlantic and Pacific Tea Company (A&P). Soon thereafter, A&P began to expand on a national scale. The company sent staff and food to Chicago after the city's devastating fire of 1871 and stayed to open stores in the Midwest. A&P paired new store openings with promotions and premiums, such as giveaways of crockery and lithographs. In some cities, the company used its famous "Teams of Eight" promotion, which entailed sending teams of eight horses drawing red and gold vehicles through the town; the person who best guessed the weight of the team was awarded $500 in gold.

A&P's stores numbered 200 and generated over $850 million in annual sales by the beginning of the twentieth century. In response to the dramatic rise in the cost of living at that time, the company introduced the first cash-and-carry A&P Economy Store. Such stores followed a simple formula: $3,000 in cash was allotted for equipment, groceries, and working capital. Only one person ran each store, and he/she was expected to adhere strictly to the company's "Manual for Managers of Economy Stores." By 1925 A&P was operating 14,000 economy stores, with sales of $440 million.

During the 1920s the company continued to diversify, opening bakeries and pastry and candy shops. Through its "combination stores," A&P introduced meat counters, and when lines at these counters became a problem, the company devised a system to make prepackaged meats available for customers. The company also introduced food-testing laboratories to maintain quality standards in its manufactured products.

A&P was virtually unaffected by the Depression, as it was firmly established and well managed at that time. In 1937 the company began publishing Woman's Day magazine as a response to customers' demands for literature with money-saving tips and recipes. The 1930s also saw the introduction of supermarkets in the United States. By 1938 supermarkets comprised 5 percent of A&P's stores and 23 percent of its business. At the end of this decade, the company was adversely affected by anti-chain-store legislation, which restricted A&P's purchasing practices. Despite this, by the end of the 1960s the company was still the grocery-industry leader, with sales of over $5 billion a year. By 1966 the company operated 4,432 retail stores in the United States and 193 stores in Canada.

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