A&P made one mistake that undermined its business

A&PGetty Images/Chris HondrosA&P just filed for Chapter 11 bankruptcy.

The famous grocer A&P filed for Chapter 11bankruptcyfor the second time in five years on Monday.

Its parent company, The Great Atlantic & Pacific Tea Company Inc., plans to sell and close all stores to save jobs and pay back debt.

“A&P has lined up bidders for 120 of its 296 stores with total expected proceeds of about $US600 million,” according to The Wall Street Journal.

At one point, A&P was one of the top grocery stores in the US.

Industry analysts believe the grocer’s demise can be attributed to its misguided focus and its inability to evolve with the changing market.

“For years the company was criticised for being slow to respond to market conditions, often focusing on extracting dollars from vendors rather than selling to its customers,” writes George Anderson, editor-in-chief of industry website RetailWire.

A&P not only failed in connecting and appealing to customers but also in modernising its dated look.

This led the business to be overrun by competitors like Whole Foods and Kroger that appealed more to customers whose interests have shifted in the past years to include organic and healthy food.

Gone is the era when supermarket shoppers thought in terms of the basics — milk, eggs, a six-pack of soda, a pound of chopped meat,” writes Charles Passy of MarketWatch. “Now, they’re going gourmet or organic — these days, that quart of milk could just as well be GMO-free soy milk — and that has paved the way for such contemporary-minded chains as Whole Foods, Trader Joe’s, and The Fresh Market.”

People are also starting to gravitate more towards specialised stores. Large grocers with so many different products can be looked at as overwhelming, even an annoyance, to some consumers.

With many consumers seeking product curation, the typical shopping experience has changed.

On average, Americans shop at five different types of stores to fulfil their grocery needs, according to Deloitte’s 2013 American Pantry report.

Whole foodsAP/Danny JohnstonA&P’s inability to keep up with strong competitors was one of the factors in its downfall.

Larger corporations with influence across multiple markets, like Wal-Mart and Target, are also worth considering in assessing A&P’s demise as they are venturing into the grocery industry, according to AP.

Besides the fact that these stores have an advantage on A&P in terms of size, these stores are also known for discounting, which attracts consumers.

A&P did show some attempts at revitalization after its first bankruptcy filing in 2010. It resurfaced as a private company 2 years later and revealed that some changes were in store for the grocer.

In 2011, Sam Martin, A&P’s former CEO, announced his turnaround plan to bring the chain back to the forefront of the industry.

His five steps included, “installing a strong management team, strengthening liquidity, reducing structural and operating costs, improving the value proposition for customers, and enhancing customers’ in-store experience,” according to Forbes.

However, A&P sales continued to slip, and no substantial progress was made.

If the grocery chain had put more effort into improving the customer experience and setting itself apart from other competitors, it might have fared better in this competitive marketplace.

A representative from Sard Verbinnen & Co declined to comment on this story.

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