In the 50’s the Great Atlantic & Pacific Tea Company (A&P) was the largest retailer in the world.
At it’s peak A&P had 16,000 small footprint grocery stores selling limited product lines.
Then, in the 60’s, A&P began to falter and became a shadow of a once great company. Why?
People’s wants (not there needs) changed…
People wanted nicer and bigger stores that offered more choices. Wanting things like fresh baked bread, flowers, health foods, medicines, fresh produce, and their annual flue jab.
In short, people no longer wanted small grocery stores on their street corner, they wanted superstores which sold everything, with cheap pricing, free parking, and fast checkouts.
Before you ask. This is not just a story of a company who didn’t change with the times. This is a story of a company who refused to change, even when confronted with the brutal facts of their reality.
The successor (Ralph Burger) to the Hartford Brothers (who oversaw A&P’s main growth) sought to preserve the past glory’ of the Hartford’s, citing ‘you can’t argue with 100 years of success’.
Eventually Burger had to admit that the model of the past was no longer fit for purpose, and allowed the board to experiment with a new store concept.
They opened a new store called ‘The Golden Key’, which sold no A&P branded products and gave store managers more freedom to experiment. It was more like a superstore and people liked it.
The Golden Key could provide the A&P’s executive team answers to why A&P was losing market share, and most importantly, what they could do to turn thing around.
What did Burger and his executive team do with The Golden Key? They closed it down! Because they didn’t like the answers it gave, and they refused to confront the brutal facts of their reality.
A&P executives began lurching from one unsuccessful strategy to the next. Before settling on price cutting. But never dealt with the basic fact, customers wanted different stores not cheaper prices.
The price cutting led to cost cutting, drab stores and poor customer service, which drove more customers away. Leading to A&P being overtaken by Kroger and subsequently Walmart.
What can we learn?
No matter how bad the situation, you need to be relentlessly disciplined and confront the most brutal facts of your current reality, then formulate and execute a plan to address it.
In 2014 the brutal facts of our reality caused us to transform our entire business model. We we’re losing both customers and money for years. Our business landscape had changed before our eyes.
Initially we choose to ignore it, like A&P did. And tried to stick small plasters over a gaping wound. They didn’t stop the bleeding, just slowed it down.
Eventually reality struck (although a few years too late) and we closed our retail stores, moved everything to a business unit, and transformed into an office technology solutions company.
And it’s taken us years to financially recover. We should have confronted our reality as soon as the brutal facts become clear, and we’re lucky reality struck just in time to let us change and recover.
We’re proof that it doesn’t matter how bleak the situation looks, if you maintain unwavering faith, you will not just survive, but prevail as a great company.
…just don’t stick your head in the sand like A&P and we nearly did!
