The modernizing role of the large multi-unit business firm in capitalist development has been oversold, according to historian Susan Spellman. Drawing on a wide range of archival documents, trade publications, and secondary sources, Spellman sweeps away the image of the “backward” corner grocer to reveal a “modernizer” at the center of business innovations between the Civil War and the 1940s: “Small grocers developed fresh ways to acquire, distribute, and market goods, radically altering the ways in which businessmen and consumers alike came to understand retail stores and shopping. In short, they actively engaged in the larger process of determining the shape of both the modern market economy and the grocery trade” (pp. 9–10). As with business people in other industries, independent grocers faced problems that required innovative responses involving technology, people, methods, and organizational structure. Spellman covers these topics with clarity and detail and in the context of larger developments in retailing and business history.
Modernization emerged slowly, but American Grocer—the industry's first trade journal, launched in 1869—“was both a signpost and roadmap for inventive storekeepers and their ideas” (p. 14). Before then, grocery stores were indistinct from general stores and grog shops. Low entrance barriers, limited business skills, and volatility often forced proprietors back to wage-earner status, but also created a revolving door of new shopkeepers with fresh ideas. These included the use of telephones, show windows, glass display cases, accounting procedures, credit reporting, commodities trading, and cash registers. These late-nineteenth-century advances transformed small, independent grocery stores into formal spaces “where social intercourse gave way to mass consumption and modern business operations” (p. 44).
Spellman offers a corrective to the prevailing view that big companies led the way when discussing the cash register of the 1880s: “Grocers’ efforts to manage operations with innovative devices reflect a previously unacknowledged history of technology from the bottom up” (p. 44). The cash register, developed by National Cash Register (NCR) and refined with input from grocers intent on stopping thieving, was the “first retail machine to address the paradox of speed and control by enabling grocers to oversee accounting on a daily instead of monthly basis, managing customer and clerk transactions and refining information about day-to-day exchanges” (p. 58). Its larger contribution was the standardization of the retail trade by grocers long before chain stores employed vertical integration and cost accounting. When Clarence Saunders of Piggly Wiggly renown applied for a patent for his “self-serving store” in 1916, the cash register was part of his schematic drawing.
The grocery trade also faced a major information vacuum—storekeepers’ credit worthiness—whose solution arrived in the form of traveling salesmen, the “trust brokers on the road” (p. 81). Whereas by 1900 many consumer goods industries had replaced wholesalers’ travelers by moving distribution in-house with vertical integration, the decentralized grocery trade with its expansive product lines continued to rely on them into the twentieth century. Connecting rural and small-town merchants with large urban wholesalers, travelers conveyed information about prices, products, and regional market conditions and “performed the inherently modern task of knitting a web of strangers into a credit, marketing, and distribution network” (p. 95). While credit-reporting firms had difficulty assessing the credit worthiness of far-flung grocers, travelers worked their social and business networks to make reliable assessments of grocers’ ability to pay their bills. This personal distribution channel, Spellman contends, was not old-fashioned. Rather, by building networks of trust and confidence that crossed local and regional boundaries and securing key information, travelers helped to usher in a modern commercial economy.
Competitive pressures led to a number of organizational changes beginning in the 1870s, including the formation of wholesalers’ associations, retailers’ buying syndicates, mail-order grocery distribution, and voluntary chains. In the 1890s, almost twenty years before chain stores emerged as formidable competitors, independent grocers sought alternative distribution paths to counter wholesalers’ cartel power. Through buying syndicates, small grocers purchased goods direct from manufacturers, who often faced pressure from wholesalers’ associations not to sell to them. Promising lower prices by eliminating all middlemen, other merchants, such as Sears, Larkin, and some department stores, began selling groceries through the mail around 1900. But consumers’ preference for local buying had ended this experiment by 1920.
Rising food prices in the 1910s and the fear of antitrust prosecution kept wholesalers’ groups on the defensive and provided space for alternative distribution channels to develop. Still, they remained essential to the grocery trade, especially for independent retailers. Beginning in the 1910s, wholesalers trained their attention on the ascendant chain stores, which pushed independents to create voluntary chains to aggregate their power. At stake were consumer preferences for either personalized selling or self-service and, according to Spellman, the definition and future of small business in America.
Piggly Wiggly–style self-service combined with A&P's scientifically managed economy stores and vertical integration to create a new focus on chains’ financial benefits that gave consumers some relief from high food prices. Still, many consumers preferred the personal service of the corner grocer. In response, chains worked hard to become part of local communities, by developing real estate, beautifying the streetscape, and being good neighbors. In some sense, they succeeded; five of the leading chains expanded from almost 7,800 units in 1920 to over 30,000 in 1930 and captured as much as 50 percent market share in some cities.
Retail grocers sought legislative relief and created voluntary chains—Red and White Stores, the Independent Grocers Alliance (IGA), and, to a lesser extent, the short-lived Colored Merchants’ Association—to curb chain power. Backed by small-business advocate Louis Brandeis and wholesalers, a number of states and the federal government passed legislation designed to aid independents, but that legislation at best had limited impact and at worst offered no protections to single store proprietors whom legislators saw as impeding progress by not matching the chains’ efficiencies. In making these choices, legislators created a new criterion for small business away from the “self-reliant personal independence” of nineteenth-century merchants and toward measures of the twentieth-century corporate chain's “efficiency” (p. 170).
As Cornering the Market repeatedly shows, a variety of industry changes regularly tilted the balance of power. During the Great Depression it was the supermarket, pioneered by King Kullen and Big Bear, which forced chains to reduce the number of stores and increase their unit size and made voluntary chains and cooperative buying more essential to the survival of independent grocers. In postwar America, chains gave way to supermarkets and, more recently, super discounters.
Through the years, and despite high mortality rates, independent grocers, “[l]ike the nation's manufacturing leaders, crafted solutions centered on efficiency, scale, and price controls, but they also focused on service, style, and community to differentiate themselves in the market. The nation's rapid advance to mass distribution and marketing took place because of independent retail and wholesale grocers, not despite them” (p. 182). In much the same way that studies of small, flexible manufacturers compelled business historians to rethink the dominant Chandlerian model, Spellman's investigation of independent grocers will push business historians to reexamine the contributions of small business to retail development, which has increasingly become dominated by large corporations.
