A&P Is On The Brink Of Bankruptcy For The Second Time In 5 Years

AP Grocery Chain Bankruptcy

A&P has been in operation for 156 years and at the height of its dominance the chain operated more than 15,000 locations and controlled $1 billion in sales. Today, the company features less than 400 stores and is close to filing for bankruptcy.

“Bids for A&P were due last month as part of an auction for the company, but no viable offers for the entire chain were received,” Bloomberg reports, citing sources familiar with the situation. “That means the stores could be sold piecemeal, marking the end of what was once the largest U.S. grocer.”

A&P told Bloomberg that “No decision has been made regarding a particular outcome, and it would be inaccurate and irresponsible to suggest otherwise.”

A&P has suffered in recent years because of a shifting consumer market. According to Deloitte’s 2013 American Pantry report, Americans now shop at five different types of stores to fulfill their grocery needs. Prescription drugs stores, speciality stores, and even dollar stores now outshine A&P in many categories of grocery sales. Many consumers have also flocked to organic foods and private label options featured at Whole Foods, Trader Joe’s, Fresh Market, and various similar competitors.

Many consumers have also begun flocking to e-Commerce platforms, such as Amazon, where many packaged goods can be purchased with free shipping and undercut prices. Online companies are also beginning to experiment with same-day shipping, adding a new layer of selling power to their platforms.

SEE ALSO:
The Best POS Systems for Small Businesses in 2016

A&P has also been hurt by the recent trend in product curation. Many stores are now offering more carefully selected product choice, in place of massive quantities of the same product from different suppliers. The average size of U.S. supermarkets ahs fallen to 46,000 square feet since 2006.

A&P is also being hurt by high pension costs and the inability to retool its stores to keep up with a changing market.

Bids for the Great Atlantic & Pacific Tea Co. owned company were due last month, however, the company was not able to find a viable buyer. The company said in March that it was reviewing strategic alternatives for the business, and that process continues, according to Hugh Burns, a spokesman for Montvale, New Jersey-based A&P at Sard Verbinnen & Co. A&P’s options include “raising new capital from investors, considering new business partner relationships and exploring the sale of certain assets of the company,” Burns said. “Because of its improved capital, the company is well positioned to consider these opportunities. The company has not set a timetable for the completion of the process.”