The writing has been on the wall for US retailer A&P for months and, over the weekend, came the confirmation of what industry watchers feared – the company filed for Chapter 11 bankruptcy.

The move, announced yesterday (12 December), is the latest twist in the troubled recent history of A&P, which is one of the oldest retailers in the US. Formed in 1859, by the 1950s the company was the leading retailer in the country. However, from the 1960s onwards, A&P has gradually lost market share and, in recent years, has faced competition from more value-oriented operators such as Target and Wal-Mart.

A key milestone – or millstone, depending on how you look at it – in the recent history of A&P was its acquisition of regional US retailer Pathmark in 2007. A&P said the US$1.4bn deal would “transform” the business but, in the last two years, A&P has made deepening losses. In July, A&P appointed Sam Martin as president and CEO – its second chief executive in six months – and since then the retailer has sold stores and made a series of changes to its management team in a bid to revitalise the business.

However, Martin and A&P are now looking to Chapter 11 protection to give the retailer a chance to turn itself around. A&P says its stores will operate as usual and suppliers and employees will be paid. Nevertheless, A&P’s move into bankruptcy could have wider implications for the retail landscape at home and abroad.

Will Tenglemann, the German retail group that is A&P’s largest shareholder, ultimately look to quit the US? Tengelmann has already sold off the bulk of its European food retail operations and could decide to pay more attention to its non-food chains in Germany.

And what opportunities does A&P’s fall into Chapter 11 provide other retailers in the north-eastern part of the US? Would the likes of Ahold be ready to buy any A&P-owned stores that could come up for sale as the stricken retailer looks to restructure its business?

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The US grocery scene remains in a state of flux in a number of ways. As well as the rumours around further consolidation – Supervalu is one US retailer that has seen its shares move in recent days on speculation of private-equity interest in the business – there is also uncertainty about how the fragile nature of the country’s economy is affecting suppliers and retailers.

Promotions have been one of the dominant features of the US food retail landscape in recent months, with deals being used to drive footfall. The measures have hit certain manufacturers – Dean Foods, Kellogg and Campbell Soup Co. spring to mind – to varying degrees but retailers are also struggling to grow their like-for-like sales.

CEOs on both sides of the fence have been vocal in their hope that food prices will start to rise due to a combination, they claim, of promotions not being in the long-term interest of either supplier of retailer and the growing pressure of higher commodity costs. “Inflation in grocery has been slow to develop, but we still believe it’s coming,” Kroger boss David Dillon said recently.

That said, some industry watchers believe the promotional intensity recently seen in the US will persist into the New Year, particularly in some ambient categories in the centre of the store. There will, therefore, continue to be questions about how the likes of soup maker Campbell can navigate such challenging trading conditions while, last week, ketchup-to-canned pasta maker ConAgra Foods issued a profit warning for the second time in three months after a weaker-than-expected second quarter.

With retailers and suppliers unsure as to whether US consumers are ready to buy less on promotion, the country’s grocery sector will remain a competitive battleground as we head into 2011. Only the strongest brands – and grocers – are likely to survive.