A combination of principle and self-interest motivated Market Basket employees to mount one of the most effective and unusual boycott efforts in supermarket history.
It was a rare case of rank-and-file employees, middle management and customers all cooperating to achieve a common objective: returning ousted CEO Arthur T. Demoulas to his former position.
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Disputes between workers and their top managers have plagued companies for centuries, and some evidence suggests that labor relations have become worse and employees less powerful as the number of unionized workers has declined in recent decades.
What’s striking about the Market Basket saga is that the workers accomplished their goal without a union. In fact, a union might have been more a hindrance than a help, according to some retail analysts.
Still, it is unlikely that the strategy carried out at Market Basket – a delivery driver walkout that disrupted the supply chain combined with a customer boycott – could be duplicated by disgruntled workers at other companies because of the unique circumstances involved, the analysts said.
“I’ve seen a number of strikes over the years,” said Jeff Metzger, publisher of Columbia, Maryland-based publication Food Trade News. “Never have I seen this type of loyalty and this type of passion.”
Metzger said the history of supermarkets contains no comparable situation in which the goal of a strike and boycott was to bring back a former CEO.
“It’s probably going to be a case study that will be examined for years to come,” he said.
About six weeks after the boycott and walkout began, the board of directors of Tewksbury, Massachusetts-based Demoulas Super Markets Inc. agreed to sell all shares of the company to Demoulas. The supermarket chain, which reported sales of roughly $4 billion, has 71 stores in New England, including one in Biddeford.
The deal, announced late Wednesday, reportedly gives Demoulas full authority to manage the supermarket chain, which employs 25,000 full- and part-time workers. Arthur T. Demoulas and his sisters already own 49.5 percent of Market Basket. Now, they will buy out the 50.5 percent of the company controlled by their rival cousin, Arthur S. Demoulas, for $1.5 billion.
Arthur T. and his management team will return to oversee day-to-day operations while the transaction to purchase the company is completed. The current co-CEOs, business consultants Felicia Thornton and Jim Gooch, will remain in place pending the closing, which is expected to take several months.
The deal follows six weeks of firings, furloughs, walkouts and protests by thousands of workers, who called for the board of directors to reinstate “Artie T.” Thousands of part-time workers were taken off the schedule indefinitely as a result, including about 270 workers at the Biddeford store.
Arthur T. made a triumphant return Thursday, speaking from the back of a truck to workers and customers celebrating at a rally outside the chain’s headquarters.
Despite a number of still-empty aisles at most stores, customers who had heard about the boycott’s conclusion came in droves to shop and congratulate employees.
BIG RISK
Market Basket employees took a big risk going up against the company’s top management and majority shareholders, said Portland labor attorney Eric Uhl. Although their stated goal was achieved, he said, it remains to be seen whether the restructured company will have the financial means to continue offering the generous wages and benefits employees have come to associate with Arthur T.
Part-time cashiers at the Biddeford Market Basket can earn up to $11 an hour, compared with the state average of about $9.40 an hour, according to Biddeford store director Micum McIntire and Maine Department of Labor statistics. Workers also receive an annual bonus that is roughly equivalent to one extra paycheck, McIntire said. And Market Basket employees are entitled to profit-sharing based on their incomes and hours worked.
FINANCIAL CRUNCH
To complete the Market Basket purchase, Arthur T. and his immediate family will incur a reported $550 million in debt to an undisclosed private equity firm.
The burden of having to pay back that money could put Market Basket in a financial crunch, exacerbated by the millions of dollars in losses it incurred during the boycott, said Uhl, of law firm Fisher & Phillips LLP.
“We’ll see if this all plays out well in the end,” he said.
Regardless of its ultimate outcome, the workers’ strategy was effective because of the extent to which it disrupted normal operations and caused the company to immediately incur huge revenue losses, said Jon Springer, retail editor for New York-based trade publication Supermarket News. That put pressure on the company’s board of directors to meet the employees’ demands, Springer said.
“Shutting down the stores created a little urgency,” he said.
The boycott also was effective, but Springer said he doubts it was entirely the result of customer solidarity with the workers, or a strong desire to see Arthur T. reinstated.
During the boycott, most of the stores’ produce, meat, dairy and bread aisles were empty. Deli counters, bakeries and in-store cafes were shut down, as well.
While there were undoubtedly some “true believers” who were boycotting the stores on principle, Springer said, many customers simply shopped elsewhere.
“They weren’t going (to Market Basket) because they couldn’t get what they needed there,” he said.
Another key to the workers’ success was their ability to shape public opinion, Springer said. Speaking openly with customers and the media, Market Basket employees convinced the public to accept a simple narrative: Arthur T. is good, and Arthur S. is bad.
“The way the whole debate was framed kind of made it into a battle of good and evil,” Springer said.
But reality is more complex, he said. Both sides of the dispute had valid interests and concerns, and they simply did not agree on how to address them.
One of the ways Market Basket workers affected public perception was by placing signs and petitions inside stores where they could not be missed by customers.
That would not have been allowed at most companies, the analysts said, especially ones in which union participation divided management and hourly workers. In that sense, not belonging to a union may have worked in their favor, Uhl said.
“Rarely would you have middle management cooperating with lower management and the employees,” he said. “And it worked.”
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