Empty shelves; an empty store: this is what real loyalty looks like!

How loyal are you to your supermarket?

Do you have one you prefer to use over others? Probably. Would you make most of your food spend there? Perhaps. Would you drive miles out of your way to shop there? Sometimes. Do you consider it an important part of your life? Unlikely. Would you make a sacrifice and join a protest movement to protect it? Unimaginable!

This tells us something: namely that, when it comes to food shopping, what often counts as loyalty has shallow roots. It is transient, tenuous, and turbulent. In fact, it isn’t proper loyalty at all.

There is one supermarket, however, that’s different. A supermarket people drive miles to get to. A supermarket that is a real part of people’s lives. A supermarket that people sacrificed and protested to save. A supermarket that has the genuine loyalty of its shoppers.

That supermarket is Market Basket.

A once little known New England grocery chain, Market Basket came to prominence in June 2014 when its CEO, Arthur T. Demoulas, was sacked by the board of directors.

Despite the chain’s profitable growth and expansion during Arthur T’s tenure, other family members who co-owned the company objected to his management. They contended that he was paying staff too much in wages and profit sharing bonuses, and that prices in stores were too low. Without Arthur T they could, they believed, maximize their profits.

On learning that Arthur T had been sacked, six Market Basket senior executives resigned. The next day a rally was held outside the company’s flagship store.

News of Arthur T’s treatment spread rapidly. Store managers, cashiers, warehouse staff, and administrators protested it. Some held rallies at their stores, others stuck up posters demanding the return of their former CEO. Local media picked up on the story and reported it.

And then something extraordinary happened: customers walked out. Not just some, but thousands and thousands and thousands of them. They refused to shop at Market Basket until Arthur T was reinstated. This, they said, was their store: they liked the way it was run, they liked the staff they interacted with, and they didn’t want 'corporate types' coming in and changing things.

This was not an action they took lightly. Many relied on the low prices of Market Basket to make ends meet, and shopping at more expensive alternatives was a sacrifice. As if to underline this, every day former customers came and taped the receipts they had received from rival stores to the windows of Market Basket's shops.

The protests grew. Store managers closed their shops. People gathered in the parking lots to protest. Some suppliers joined in and terminated their contracts with Market Basket.

The move by the family, designed to extract more profits, was costing the company hundreds of millions. It was fast on its way to bankruptcy.

Late in August, after the governors of both New Hampshire and Massachusetts had intervened, the family members agreed to sell their stakes to Arthur T, giving him control of the company and putting him back at the helm. 

After it was announced, staff immediately returned. They worked around the clock to restock stores and get the supply chain moving again. Suppliers helped out. And customers returned too, in greater numbers than ever before. Arthur T was back – and so was Market Basket!

This state of affairs – a demonstration of almost unprecedented loyalty to a store, to its proposition, and to the man who ran it – raises a question: how did Arthur T do it?

The answer is surprising in its simplicity. Arthur T treated people well, he treated people fairly, he treated people honestly, he empowered them and made them feel like they owned the business.

The ‘excessive’ wages and bonuses the family saw as a waste of their profits were no such thing. They were a just reward for a workforce that was highly, highly productive; a workforce that would go above and beyond to serve the business because they felt it valued them and wanted their ideas and contributions.

The lower prices that the family saw as an erosion of their margins were no such thing. They were an essential point of differentiation based on Arthur T’s understanding of his customers and what mattered to them.

Most critically these two things went hand in hand. Arthur T’s business model wasn’t predicated on maximizing margins, it was predicated on maximizing the productivity and efficiency of employees. And his low prices weren’t just low prices, they were low prices together with exceptional staff motivated to give great customer service and to look after their stores and products – something that added up to fantastic value for money.

He achieved this not through micromanagement, meaningless performance targets, or complex hierarchies, but by simply making people feel passionate about the business they work in; by letting them know that they matter; by rewarding them for success; by treating people as people.

Arthur T may well be nice, but his business is also highly successful. Profits have doubled under his leadership and the firm continues to expand, opening its 76th store in Portsmouth, Massachusetts, this past Sunday. More openings will follow over the next few months.

So that’s ultimately what real loyalty is all about: genuine interactions with people: both staff and customers. And strangely enough it’s what good business is about too.

As Arthur T puts it: “if everyone in the workplace is equal and treated with dignity, they work with a little extra passion, a little extra dedication. I think that’s a wonderful business message to the world.”

Isn’t it just?!

More resources:
The recently released film, "We The People: The Market Basket Effect", provides an excellent and compelling overview of the protests.
https://www.themarketbasketeffect.com/trailer