Restructuring
After initial merger pains, Farmer Jack rose to prosperity, becoming A&P's most profitable division. However, by the early 2000s, Farmer Jack struggled to compete with newer, larger stores; less-senior, lower-cost labor; and more tech-savvy, efficient operations offered by rivals Meijer and Kroger. Rather than investing significant capital into upgrading existing stores, A&P focused on expanding the chain beyond Southeast Michigan, entering Toledo, Flint, Saginaw, and Lansing markets. Meijer was engaged in an aggressive price-cutting campaign to fend off K-Mart's aggressive Super Center expansion, as well as Walmart's proposed entry of Supercenter stores. Farmer Jack found it necessary to reduce prices to compete.
Farmer Jack's Detroit-area stores were experiencing significant drops in revenue due to the price cuts, as well as consumer flight. Rather than adding revenue, the chain's expansion proved to be a failure and major financial drain. Farmer Jack was now losing a significant amount of money. Then, an accounting scandal hit the chain.
In 2002, the chain reorganized, closed stores, and cut staffing. Farmer Jack attempted to improve its image by advertising clean stores and guaranteed fresh food. They converted a number of their older stores to A&P's Food Basics format in an attempt to compete with extremely low priced chains such as Save-A-Lot. Unfortunately, the efforts proved too little and by 2005, the chain was officially up for sale. An agreement was reached to sell most of the chain to Spartan Stores. However, Spartan backed out of the deal and, combined with a wage concession from its unionized workers, a decision was made not to sell Farmer Jack.
By late 2006, A&P was reporting that Farmer Jack was breaking even and sometimes recording a small profit.
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