Amazon is not the first big retailer to disrupt the American retail landscape. Just after WWII, another big chain: A&P or Atlantic and Pacific. For most Americans, especially in grocery, they shopped at the local grocer. He likely lived in the same community where he owned his store. Chain stores were practically non-existent except for the major department stores which tended to locate themselves in major cities like New York, Chicago, Los Angeles, San Francisco or Seattle.
Catalog companies like Sears, Montgomery Ward, and JC Penney often had showrooms in smaller towns where people could order items and have them delivered. However, chains wouldn’t really take off until after WWII, before then shopping took place locally, especially for food.
The Anti-Chain Movement
A&P innovated by offering lower prices by buying from the manufacturer and buying in bulk. However, like many innovations, it was not welcomed at first. This onslaught of cheaper prices from the chain was resisted by populists like Huey Long and even the KKK. Although it might seem romantic to visit the local grocery it was expensive and had limited options for the consumer. Americans spent 1/3 of their income on food with few options. In bigger cities, it was common to visit a butcher, fishmonger, greengrocer, and dry goods store separately. For the housewife, shopping for the needs of the home could occupy at least a whole day, if not longer. Chain stores like A&P offered a better selection and a lower price which was not the advantage of the local store.
Congress took action to stop the spread of chain stores by making it illegal to give them preferential pricing. 26 states taxed the stores to protect local businesses that operated within the state. There was even an attempt in 1936 to kill chain stores entirely but the bill failed in Congress. Chain stores would remain in an interesting legal limbo until after World War II.
Much like shoppers today, despite their professed love of the local retailer, Americans are budget conscious and the lower prices of the chain stores attracted ever more shoppers.
The Rise of the Modern Chain Store
Mass consumption following WWII would put the chain-store front and center in American life. A&P had done great work in lobbying and working with federal leaders to secure their place in the greater economy and slowly these stores would take over the main streets of America. A&P reached out to communities and improved their reputation. This allowed the chain to expand and thrive until its closure in 2015.
As the shopping mall developed, chain stores became eponymous parts of suburban life. Independent grocers began to replicate the selection and layout of what we would recognize as the modern grocery store. Those that adapted survived and those that didn’t closed. However, those same stores would eventually be disrupted in the 1980s by the discount retailer. Target, Wal-Mart, and K-Mart would soon begin to take over the retail landscape and when all three launched grocery sections with Super Target, Super Walmart, and Big K; the disruptors were soon disrupted themselves. Many of the familiar stores that once dominated the landscape have now closed. In another turn of events, those same stores are now struggled to compete with online options: principally Amazon with its 2-day shipping of nearly every object imaginable. There is much that Amazon and Wal-Mart can learn from the rise of America’s first chain store.
A&P used lobbying and soft skills like their reputation to win over consumers and government leaders. Amazon, Google, Facebook, and Wal-Mart will need to use similar strategies to avoid anti-trust investigations. A&P was the beginning of a change in the economy just as Amazon is now. The future of retail is digital and Amazon has become the master of that space. Even as Wal-Mart and others catch up to Amazon, Amazon still stands astride the e-commerce space. Amazon, rather than pursuing endless growth will need to work with federal and local leaders to demonstrate how having Amazon in their community is beneficial rather than a drag on local businesses and the economy. Google and Facebook would do well to study this story as well. Often, new disruptive technologies and innovations are welcomed until the downsides become apparently. We often don’t know what we had until we’ve lost it.
For shoppers in the 1950s, they lost the personal service, local delivery, and other services that the local grocer offered in favor of doing their own collection and packaging. Today, we are losing the shopping mall as an important 3rd space and we are losing the experience of shopping from store to store and place to place. We are straining America’s infrastructure with the number of things being delivered. The people that work in Amazon’s warehouses are suffering injury and strain as they attempt to get our goods to us ever more quickly. Just as when A&P arrived, many people fear that Amazon will spell the end of local retail. The end of local retail may be premature but then again, local grocery stores didn’t disappear entirely until Wal-Mart arrived. Will Amazon promoting its own products disadvantage other brands? Will its convenience and ubiquitousness spell the end of regular stores? Only time will tell.