Of Endings and Beginnings

In the 1920s, A&P stood at the top of its category as a retail grocery chain. Only a few decades later, it was supplanted by chains able to offer lower prices for groceries.

What happened?

First, credit Henry Ford for democratizing the automobile, a tool that made it less work to travel a few miles to haul a great deal of groceries rather than walk a few blocks to carry a small supply of groceries.

Second, the popularization, availability, and affordability of personal refrigeration allowed people to store perishable goods for longer periods of time, making visits to grocery stores less frequent by allowing consumers to bring home more at one time.

Third, the competition was able to make use of these trends by consolidating supply, increasing their economies of scale by purchasing and selling in greater quantities, which allowed them to charge lower prices for commodity goods.

Fourth, A&P failed to adapt to these same trends. Now the grocery chain is a shell of its former self -- in many cases even lacking name recognition among large segments of the population.

What is important here isn't the particular experience of A&P, which may still one day recover its former glory. Needless to say, no one needs to reinvent the automobile. However, that's not to say that some technology or newly discovered business efficiency won't make your current service obsolete. Think music downloads vs CD sales or online media vs newspaper consumption.

Even though you may be at the top of your game, don't ever believe that you will remain there by standing pat, and if the marketplace is telling you it wants something you're not providing (or if it's telling you it doesn't want something, but you're going to force on it anyway), LISTEN. While the number '2007' lacks the attractiveness of a round number, your customers will not wait until 2010 to abandon you if you cease providing something that they want, as long as their money has alternative uses. - Cam Beck

Comments

[Paul Herring]

Cam, you should check out the analysis of A&P in "Good to great". "A&P opened a new store called Golden Key, where it could experiment with new methods and models and learn what customersmore modern superstore. A&P began to discover the
answer to the questions of why it was losing market
share and what it could do about it. But A&P executives didn’t like the answers they got, so they closed the store, rather than diverge from their ages-old business ideas."