“In 1935, A&P opened its first supermarket in Paducah, Kentucky. The goal was to hold expenses to 12% of sales, far below the company-wide average of 17.6%. At first, the goal seemed unattainable, but as the store lowered its prices, sales soared with little increase in operating costs, and the expense ratio began to fall. John Hartford liked what he saw, and he encouraged other experiments to raise volume by lowering prices. These trials showed that if they were located properly, supplied efficiently, and operated on a self-service basis rather than with clerks waiting on shoppers, supermarkets could be highly profitable. In some stores, expense rates fell to less than 11%, more than a third below the company-wide average. In March 1936, John spoke to the division presidents about developing more supermarkets. He was plainly worried about A&P’s competitive position…In too many places, A&P was no longer the low-cost grocer…In 1937 and 1938 combined, more than 4,000 older stores were closed down and 750 supermarkets were opened…Supermarkets allowed A&P to capture economies of scale and the company’s sheer size permitted it to capture those scale economies in a very big way.” Marc Levinson
Brand Ambassador at Xtreme! Marketing
1moSee you there next week!!