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:
~*~
Dear All,
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.
Jnana's Red Barn 
Wow I hadn’t heard about this Nor’Easter. I bet the big corporates are beefing up their invasion plans. More Wal-Marts for you? (I hope not)
Wonderful report of the mess we are all living with. As a refuge of the corporate world, I too side with the MB employees. I also think it is a really positive sign that people are standing up and saying “we’re not going to take it!!”
More and more, I’m seeing large corporations as dinosaurs. A new economy is already in motion, though I’m not sure exactly how beneficial it will ultimately be. Visionaries are needed who can help shape its path to the maximum utility of all, not just the richest.
Still, the drama before us may be a harbinger of things to come.
I hope that the customers, managers and employees all stand tall and really show what a good corporate model should look like. Perhaps the ousted CEO can create his own chain and run his old company into the ground.
That’s one of the options. He apparently has investors lined up and is making a pitch to buy out the rest of the family; should that fail, we have yet another act or two to go. Or maybe this becomes a TV serial?
well that just about sums it all up all round, so to speak. no small shops here any more just one big shop fighting another one right next door. the world has gone mad!
how sad.
Every day brings a new twist. This morning, the attorneys general of Massachusetts and New Hampshire entered the fray.
And days ago, Arthur T. made an offer to the rest of the family … which continues to diddle.
The loyal shoppers, however, continue to boycott. It’s the major topic of conversation wherever I go.