February 20, 2001, 9:12 AM —
AT THE TURNof the century, dappled gray horses pulled A&P's red wagons through the streets of lower Manhattan in a marketing scheme designed to lure shoppers to the store. Decades later one of those shiny red wagons adorns the lobby of the grocery chain's headquarters in Montvale, N.J. -- a nod to the supermarket company's glory days, but also a glaring reminder of its image as an old-fashioned outfit that has fallen dangerously behind its competitors. While its biggest rivals are benefiting from years of investments in IT and other areas, A&P now faces a life or death test.
The 142-year-old grocer, known officially as the Great Atlantic & Pacific Tea Co., has put its future on the line with a four-year, $250 million systems and supply chain overhaul that will ultimately replace close to 95 percent of its current applications. Saddled with an antiquated IT infrastructure and facing threats from new grocery entrants such as Wal-Mart Stores, discount club stores and convenience stores, A&P had little choice but to take an ax to its legacy systems and outdated business practices.
Now, the company faces an uphill battle -- and a tide of skepticism from Wall Street investors -- as it prepares to implement an ERP-type system it hopes will transform A&P from old-time grocer to a high-tech retailer equipped to compete. "This is virtually 'Bet the company,'" says Nicholas L. Ioli Jr., senior vice president and CIO, who was brought in a year-and-a-half ago to oversee the IT project. "If we're going to be a player in the industry, we've got to leapfrog our competition. We're talking strategic change."
A&P's a famous brand -- to your grandparents. In 1912, A&P stores instituted "cash and carry" transactions at a time others kept customer tabs. A&P was among the first grocers to make its own products like A&P Bokar Coffee (which Cmdr. Richard Byrd carried on his 1929 Antarctica expedition). The company launched Woman's Day magazine in 1937. And at its loftiest, A&P's revenue in 1950 was second only to General Motors. But that was then.