The Great Atlantic & Pacific Tea Company, better known as A&P, was an American chain of grocery stores that operated from 1859 to 2015. From 1915 through 1975, A&P was the largest grocery retailer in the United States (and, until 1965, the largest U.S. retailer of any kind).
A&P was considered an American icon that, according to The Wall Street Journal, "was as well known as McDonald's or Google is today", and "the Walmart of its time." At its peak in the 1940s, A&P captured 10% of total US grocery spending. Known for innovation, A&P provided variation in the US consumer's diet and nutritional habits by making available a vast assortment of food products at much lower costs. Until 1982, A&P also was a large food manufacturer.
A&P was founded in 1859 as "Gilman & Company" by George Gilman, who opened a small chain of retail tea and coffee stores in New York City, and then expanded to a national mail order business. The firm grew to 70 stores by 1878; by 1900, it operated almost 200 stores. A&P grew dramatically by introducing the economy store concept in 1912, growing to 1,600 stores by 1915. After World War I, it added stores that offered meat and produce, while expanding manufacturing.
In 1930, A&P, by then the world's largest retailer, reached $2.9 billion in sales ($55.9 billion today) with 15,000 stores. In 1936, it adopted the self-serve supermarket concept and opened 4,000 larger stores (while phasing out many of its smaller units) by 1950. After two bankruptcies, A&P finally closed the last of its doors in 2015.
The forerunner of A&P was founded in the 1850s as Gilman & Company by George Gilman (1826–1901) to continue his father's leather tanning business; in 1858 the firm's address was 98 Gold Street in Manhattan. Gilman's father died in 1859, leaving the son wealthy. That year, Gilman & Company entered the tea and coffee business from that storefront. One source speculates that Gilman decided to enter a more respectable business in light of his wealth. In May 1861, Gilman turned over the tanning business to his brother Winthrop; George moved his tea business to 129 Front Street. Initially, Gilman & Company was a wholesaler. In early 1863 the firm became a retailer, Great American Tea Company. Quickly, it opened five stores, moving its office and warehouse to 51 Vesey Street.
Gilman proved to be a master at promotion; the business quickly expanded by advertising low prices. The firm was able to offer low prices by acting as both the wholesaler and retailer. Gilman also built a nationwide mail order business. By 1866, the firm was valued at more than $1 million (~$16.8 million in 2024). In 1869, the transcontinental railroad was completed; Gilman created a parallel company, the Great Atlantic & Pacific Tea Company, to promote the then-new concept of prepackaged tea under the Thea-Nector name. The tea company, which some sources say was co-founded by George Huntington Hartford, continued to use the Great American name for mail-order purposes. In 1871, A&P introduced another concept when it offered premiums, such as lithographs, china, and glassware with the purchase of coffee and/or tea at its stores. These premiums are now collectibles.
Evolution of the grocery store
Hartford joined Gilman & Company as a clerk perhaps in the late 1850s; Hartford later was promoted to bookkeeper, then cashier, in 1866. By 1871 Hartford was in a position of authority and was responsible for expanding A&P to Chicago after its great fire. A&P's first store outside New York City was opened just days after the disaster. The firm rapidly expanded; in 1875 A&P had stores in 16 cities. In 1878, Gilman left the active management of the firm to Hartford. By then, the firm operated 70 lavishly equipped stores and a mail order business with combined annual sales of $1 million.
To raise revenue, Congress raised tariffs on tea and coffee. Profits on these products declined; around 1880 A&P started to sell sugar in its stores. The company continued aggressive growth and by 1884 operated stores as far west as Kansas City and as far south as Atlanta. The company also operated wagon routes to serve rural customers. About this time, two of Hartford's sons, George (1864–1957) and John (1872–1951), joined the firm. A&P lore holds that George convinced his father to expand the product line to include A&P-branded baking powder. Over the next decade, the company added other A&P-branded products, such as condensed milk, spices, and butter. As it expanded its offerings, the tea company was gradually creating the first grocery chain. By 1900, the firm had sales of $5 million (~$155 million in 2024) from 198 stores as well as its mail order and wagon route operations. However, other grocery chains were expanding more rapidly and blanketing their respective areas while the tea company's stores were spread over a much larger area. A&P quickly found itself at a disadvantage.
In 1901, George Gilman died without a will, starting a legal battle among his numerous heirs. The senior Hartford stepped into the battle by asserting that, in 1878, Gilman gave him half of the company in an unwritten partnership agreement. Evidence provided to the court established that Hartford received half of A&P's profits starting in 1878 and that the company's leases were in his name. The heirs realized that without Hartford, the firm would quickly become unprofitable. Therefore, in 1902 they agreed to a settlement where A&P was to be incorporated, with $2.1 million (~$61.4 million in 2024) in assets.
Under this agreement, the Gilman heirs received $1.25 million in preferred shares at 6% interest, while Hartford received $700,000 in common stock and the remainder of the preferred shares. This gave Hartford control of the voting stock. Over several years, Hartford was able to repurchase the preferred shares from the Gilman heirs. A&P opened an average of one store every three weeks. A nine-story headquarters and warehouse was built in Jersey City; it later expanded to include a manufacturing plant and bakery.
By 1908, George Hartford Sr. divided management responsibilities among his sons, with George Jr. controlling finance with John directing sales and operations. The sons ran A&P for over 40 years. The younger Hartford moved aggressively to promote the A&P brand, dramatically increasing the product line. To make space for the new items, A&P replaced in-store premiums with Plaid Stamps, which sought to mimic S&H Green Stamps, a popular rewards program. By 1912, the corporation operated 400 stores and averaged a 22% gross margin, resulting in a 2% profit. A&P's peddlers were also operating 5,000 rural routes in distinctive red-and-black wagons.
Food prices were a political issue in the 1912 presidential election after a 35% increase in 10 years. To counter this trend, some chains experimented with a no-frills format. After long debate, the Hartfords agreed to John's proposal of experimenting with an economy store designed to operate at a 12% gross margin. Capitalized at only $3,000 including its initial inventory, the prototype economy store operated with only a manager, and without fancy fixtures. Within two months, weekly sales increased to $800 and the store achieved a 30% annual return on investment. A&P quickly expanded the concept; by 1915 the chain operated 1,600 stores.
A&P's tremendous growth created problems with suppliers. Cream of Wheat, the largest breakfast food manufacturer, demanded that all retailers adhere to the cereal's pricing per box. A&P purchased the product at wholesale, 11 cents per box (3 cents less), and decided that a 1-cent markup was appropriate for its economy store format. Cream of Wheat cut off supplies and A&P sued. U.S. District Court Judge Charles Hough ruled against A&P, saying that a manufacturer can establish retail prices. As a result, A&P and other large chains expanded manufacturing of private brands.
Hartford Sr. died in 1917; control of the company passed into a trust with his sons George, Edward, and John as trustees in complete control.