Friday, September 5, 2014

Why Market Basket Is a Win For Everyone

A few weeks ago, I wrote about boycotting Market Basket due to the firing of CEO Arthur T. Demoulas and others loyal to his side of the family in the decades long feud over the supermarket empire.

Well, the saga is finally over and best of all the good guys won.

Why are Arthur T. Demoulas and his staff the good guys?

Let me count the ways.

1. Success. With a 71 store regional chain valued at 4 billion dollars prior to the 6 week walkout/shutdown/boycott, Arthur T. Demoulas proved beyond a shadow of a doubt that a corporation can be profitable, generous, socially and economically responsible and reward its employees with bonuses, promotions and incentives.

Going forward, Market Basket and Arthur T. Demoulas should be a case study for business models. The grocery business is cutthroat and highly competitive with razor thin margins. Yet Mr. Demoulas has successfully demonstrated that all of these things can be part of the corporate culture without damaging the bottom line.

Witness the 300 million dollar payout Arthur S. Demoulas and his fellow board members voted themselves last year. In spite of Arthur T's objections, the shareholders saw fit to disburse that money among themselves.

There was plenty of $$ in the kitty.

2. Employee Loyalty. When have we ever witnessed 25,000 employees including management put their jobs and careers on the line together with such resolve?

My best guess would be never.

Without a union these brave men and women took a stand vowing not to work for anyone other than Arthur T. Demoulas. That cannot be faked, manufactured or manipulated. Many of Mr. Demoulas' employees have been with the company for 30+ years.

In fact, one employee, Jim Miamis has been with them for 70+ years!!! Mr. Miamis is 86 years old and still going.

There's even a 94 year old gentleman who works at one of the stores in New Hampshire, Arthur St. John. Mr. St. John started working there 22 years ago, which means he was hired when he was 72.

Arthur St. John. 94 years young!
That comes from one thing and one thing only:

Loyalty

And folks, loyalty is a two way street. You can't have one without the other. These workers and managers all proved beyond any doubt that the company is being run correctly and compassionately.

3. Customer Loyalty. Again, this is a two way street and Market Basket passes with flying colors. I have never witnessed anything like this where customers from a broad range of geographic locations and income levels, all stayed away for 6 weeks.

Market Basket's business plummeted 90% during this boycott.

The city where I live has many folks who rely on Market Basket for two main reasons:

1) Prices
2) Locations

We have about 8 stores in close proximity to my city. Quite a few customers in this area do not own transportation and do not make the kind of money to afford shopping at Market Basket's competition.

Yet they did.
We all did.

My wife and were amazed every time we passed a Market Basket and saw very few cars in the parking lot where there would normally be hundreds. In fact, we typically went shopping after 7:00 on Saturday nights (yep, we have no life!) to avoid the crowds. We've since switched to Wednesdays (thanks to advice from my son who used to work for competitor Hannaford's) which seems to be an even less busy time to shop.

Tens of thousands of customers showed up in support in multiple rallies over the summer organized by employees..

You won't see people coming to a rally by the thousands for Starbucks.

4. Vendor Loyalty. Yes, even Market Basket's vendors began to jump ship when it seemed like there was not going to be a resolution. But once the agreement was reached and the stores were getting ready to be stocked, these vendors showed even more loyalty by making deliveries directly to stores to help get them back up and running.

You won't see that too often either.

Here's a quote from one of the vendors from the above link in the Boston Globe:
Another vendor, Extra Virgin Foods of Watertown, said it has ended its relationship with the company to support other managers who were fired along with Demoulas.
Extra Virgin Foods sells $2 million in Greek foods to Market Basket each year, said owner Paul Hatziiliades. 
“They’re about 60 percent of our annual business.
“But I’m just not going to deal with those people,” he said of co-chief executives James Gooch and Felicia Thornton, who were hired to replace Demoulas.
And finally, the man himself.

5. Arthur T. Demoulas. Just listen to his speech when the agreement was reached:


This folks, is how a leader sounds and acts. (Unlike others who announce they don't have a strategy...)

My wife and I (yes, we shop together) went back to Market Basket this week and it felt amazing to be back. The stores aren't quite fully stocked as yet, but you can bet they will be back to 100% in about a week.

When we were leaving we saw this sign posted over each door at the entrances and exits


Here's a shot I took of another sign on the way out


How will this serve as a model to other corporations and businesses? Time will tell. Market Basket has been around for a long, long time and is a very well established business. However, in spite of nearly 40 years of family infighting and feuding, the company prospered and grew and was profitable.

Arthur T. Demoulas had to pay a reported 1.5 billion to buy out the rivals to take complete control which now puts debt into the picture. Debt that the company never had before.

However, given the fact that there was enough cash to take a $300 million dollar payout to the former shareholders, my guess is Market Basket will be just fine. In fact, Arthur T. announced recently that they are planning to go ahead with expansion plans for four stores that were in various stages of completion prior to the shutdown.

Why is a supermarket, a grocery store so important?

To us, it was an eye opening experience. We split our shopping between WalMart and Stop and Shop (the largest grocery chain in our region) and it showed us how well run Market Basket is compared to their competition. Now in fairness, WalMart is fairly new to the grocery game and they certainly aren't geared up to the amount of customers that they suddenly gained. And neither was Stop and Shop.

The first few weeks were a nightmare. WalMart's cash registers just aren't setup to handle large grocery orders. And they have bag carousels at the end of each register with no baggers. The cashiers have to do all the bagging. It was a slow painful process to say the least.

On the other hand, Stop and Shop was actually a worse experience. I understand that they had to be cautious buyers, wary of overstocking and hiring new help with the threat of Market Basket returning, but shopping there was in plain words just a bad experience.

First the prices are just astronomical compared to Market Basket. (And Market Basket also takes another 4% off your bill through this year!!) Secondly, the store just seemed confused the way it was laid  out.

Grocery stores these days all follow the same cookie cutter layout, produce in the front as you enter and the rest all laid out in what the latest marketing trends tell them.

To us, Stop and Shop was disorganized and over priced. Yes, part of the disorganization was due to the increase of customers, but they are the largest grocery chain in the area. They should have and could have been better prepared.

To answer the question why Market Basket is so important, you have to look at a bigger picture than just grocery shopping. As important as saving money is with regard to what we all spend each week, what Market Basket is is a place where people who work hard can be successful.

We've somehow gotten way off that track here in this country. We place a value on higher education, which of course, is important.

But not everyone goes to college.
Not everyone can afford to go to college.
Not everyone is cut out to go to college.
What about them?

Not too long ago you could get a job right out of (or during) high school and make a decent living. In fact, we ran into one of neighbors at Market Basket the other night who did just that. He got a job at a local distributor right out of school and still works there 35 years later. But he almost lost that job because that distributor just happens to be one of Market Basket's vendors and Market Basket is its largest customer. Our friend told us that there were employees who were in their 70's and 80's who were callously let go and aren't coming back.

Kids (and their parents) these days come out of college with tens (and in some cases) hundreds of thousands of dollars in debt and many do not have any prospects to find a job in the fields where they studied.

Market Basket offers opportunities to those who work hard and those who excel.

Which brings me to the latest insanity about raising the minimum wage to $15 per hour.

That is not what entry level employment is all about. We hear the disingenuous "Nobody who works full time should be living in poverty" tripe.

You should not be trying to support a family or yourself with an entry level minimum wage job as a career.

Ever.

What about those who aren't educated enough or lack skills?

Well, that's what ENTRY LEVEL means.

Learn some skills.
Get educated.
Work hard and advance.

But for goodness sake, please don't expect to be paid a "living wage" to stand behind a cash register or a drive through window at a fast food restaurant for the rest of your life.

That is insanity.

Aim higher.

That is what this country is all about. That is the basic principal of what democracy is. The freedom to become whatever it is you are capable of becoming.

You and you alone have that power.

Not the government, not laws that require employers to pay more money than what a skillset is worth.

You.

This is why a story like Market Basket is important. And this is the lesson that we as Americans should take away from this:

True success is earned.
It is not entitled.
It is not taken and redistributed.
It is earned on every level.

What this all shows is that there can be balance between corporate profits, customer and employee satisfaction. And the funny thing is, it's not magic, it's not some bold new age strategy never seen before.

It's just common sense.
Arthur T. Demoulas walks the walk and talks the talk.

And that's the difference.

The word unprecedented hardly describes what happened here this summer.

Thank you Arthur T. Demoulas, thank you Market Basket employees and thank you Market Basket management and administration.

You have shown the world how to work and how to live.




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