For past several weeks, the hottest news story across New England has been over what will no doubt be a textbook case of how to kill your own golden goose in corporate America.
The business is a family-owned chain of 71 supermarkets that has somehow managed to carve out the region’s highest profit rate in a notoriously thin-margin field while simultaneously paying its workers more than its rivals — along with profit-sharing and bonuses — while keeping its prices well below those of the other grocers. (You can imagine, for one thing, that the pilferage that undermines many groceries is nonexistent at Market Basket. Its workers are loyal, at least to the executive responsible for the success — a man who seems to know not just each of them but their family members as well.) Add to that a great deal of flexibility for store managers to respond to customer requests and you can understand the wide variety of ethnic foods found on the shelves; consider the fact that our local Asian restaurants choose to buy their tofu supplies at Market Basket rather than the wholesalers, and you get a sense of how that policy pays off all the way around.
In recent years customers have turned in droves away from the competition, and their loyalty is palpable. Lately, I’ve found parking spaces are always available right by the front doors of those underpopulated stores, unlike Market Basket, where the parking lot and aisles are always overflowing.
Given the win/win/win realities of the still growing Market Basket chain, nobody was prepared for the directors’ decision to ax its successful president. Well, half of the board’s decision.
The half that wasn’t prepared for the impassioned backlash from the public or its own workers, who have essentially shut down the operation.
The board’s decision, as far as anyone can see, was based more on lingering bad blood in the Demoulas family that had previously erupted in a notorious 1990 lawsuit that nearly forced the sale of the company, this time apparently heightened by greed. Seems there’s a $300 million reserve fund, for one thing.
But if the side that ousted Arthur T. Demoulas and his top aides thinks it can manage the company better than he did, it’s produced no evidence to date. Indeed, each day brings another public relations debacle that has gone unchallenged and signs the victorious side of the board is unaware of what’s happening on the streets. Brand loyalty, as the lore goes, is priceless. And it’s hard to win back. If they’re hoping to sell the chain, its value is plummeting by the hour. How often, after all, have you seen managers and workers stand together in solidarity as they are now?
The daily drama is not subsiding.The region’s newspapers, led by the Boston Globe, have been covering the details thoroughly, and I’ll point you in that direction.
For now, there are the petitions to sign and emails to send.
Here’s one example that was sent to the independent board members:
I have shopped at Market Basket for 30 years. I appreciated the low prices as well as the availability and quality of ethnic foods. When I learned that the employees were also the highest paid of any grocery in New England, that cemented the choice. I’ve barely walked through the door of a Hannaford or Shaw’s in 15 years.
Yesterday, I went to my local Market Basket, but only to sign the petition and cheer on the workers. I then I bought my groceries at Shaw’s and planned a trip to Costco.
You have had a business model that serves customers, employees, and owners. That this model would be thrown over for no discernible reason except personal animosity and greed is beyond me. I do not know or care if ATD is a good or terrible human being. I do believe he is a supremely competent one. He has run a business that gives customer the lowest prices, employees the highest compensation, and the owners considerable profit, while maintaining zero debt and ensuring the stability of the company. I have paid close attention to every news report I can find to see if there was any substantial reason for ATD”s removal. Nothing I have heard or read has indicated that new management has better ideas, or for that matter any ideas at all. That, in addition it cared so little for the loyalty and dedication of its employees that made the model work is the final straw.
You’ve lost another customer.