On June 23, 2014, the long-time CEO of a popular New England supermarket chain was ousted by his board of directors, led by his cousin. What transpired over the next two months is an inspiring tale of epic loyalty to a man who had impacted his community far beyond that of providing groceries.In We Are Market Basket, readers will learn more than simply the story of the strike heard round the world. How did a single CEO garner so much respect from his company’s managers and rank-and-file workers that they walked out of the stores and protested? How did the ousting of an executive result in customers leaving the stores and joining protest rallies? Politicians were forced to take sides, and media were left stunned at the unprecedented and united show of support for this lone businessman. What was so special about this CEO and how he ran his business that provoked such ferocious loyalty? How does a company spread across three states maintain a culture that embraces everyonefrom cashier to customeras family? Can a company really become an industry leader by prioritizing stakeholders over shareholders? With its arresting firsthand accounts from the streets and executive suites, We Are Market Basket is as inspiring as it is instructive as it chronicles the epic rise, fall, and redemption of an iconic and uniquely American company.
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About the Author
DANIEL KORSCHUN is an Assistant Professor of Marketing at Drexel University's LeBow College of Business and a Fellow at the Center for Corporate Reputation Management.
GRANT WELKER covered the Market Basket story from the start as a reporter for the Lowell Sun.
Read an Excerpt
We Are Market Basket
The Story of the Unlikely Grassroots Movement that Saved a Beloved Business
By Daniel Korschun, Grant Welker
AMACOMCopyright © 2015 Daniel Korschun and Grant Welker
All rights reserved.
"You've Never Met a Family Like This"
It is hard to imagine a more challenging time and place to open a grocery than 1917 in Lowell. But that's when Market Basket got its start in this mill city on the Merrimack River about twenty-five miles north of Boston. In the late 1800s, Lowell had been heralded as a beacon of the Northeast. The first two decades of the twentieth century were a different story. Lowell's fortunes were on a downturn.
The city had previously relied on the Merrimack River to generate endless, relatively low-cost hydropower. This enabled decades of growth, turning the Merrimack Valley into a stalwart of the textile industry. But the rise of coal as a cheap alternative energy source turned Lowell's competitive advantage into a competitive shortcoming. Its infrastructure was inflexible, and the mills began to close one by one. Textile companies moved their mills to seaport locations, which could receive coal shipments more cheaply.
As jobs dried up, unease hung heavy in the region. The unease fueled a number of worker strikes at mills in the region, the most famous of which is the Bread and Roses Strike in nearby Lawrence, Massachusetts. During that strike, about thirty thousand textile workers walked off their jobs for two-and-a-half months during a bitter winter in 1912. The struggle began on New Year's Day, when legislation took effect reducing the workweek from fifty-six to fifty-four hours. The law was supposed to provide relief for workers, but companies responded by reducing overall weekly pay. A group of workers at the Everett Mill opened their paychecks to find a pay reduction of $0.32 (the average weekly pay for these workers was $8.76). The cut translated into roughly four loaves of bread per week for families of mill employees. They walked off the job and demonstrated, chanting, "Short pay! Short pay!"
The Industrial Workers of the World (known as the Wobblies) appealed to a wide range of workers affected by the pay cut. Mostly the workers were immigrants from southern and eastern European countries, as well as parts of the Middle East. They were separated by cultural, religious, and linguistic differences. Determined not to let those differences interfere with their resolve, the Wobblies recruited representatives from English, Polish, Greek, Italian, and other backgrounds. The protesters became bound by a common need to improve their living and working conditions.
A walkout at the Everett Mill quickly spread to others in Lawrence as more and more disgruntled workers joined in. Within a week, their numbers had swelled to ten thousand. Their demands were straightforward: a 15 percent increase in wages, double pay for overtime work, and a pledge from owners to not retaliate against strikers.
A majority of the workers in the mills of Lawrence were women and children, and the protest gained strength from the feminist movement of that time. They were fiercely determined to change the way ownership was operating the mills, showing "lots of cunning and also lots of bad temper," according to one mill boss. One group of women cornered a police officer, stripped him of his uniform, and tossed him over a bridge into the icy waters below. Such civil disobedience led the district attorney, Harry Atwell, to comment that "one policeman can handle 10 men, while it takes 10 policemen to handle one woman."
The strikers dug in for a long struggle; they formed relief committees that provided food, medical care, and clothing to families left without an income. The companies hired thugs to intimidate the protesters. The governor of Massachusetts sent state police and militia to fire-hose picketers. This only enflamed tempers more. Their resolve and unity remained intact. One magazine observed, "At first everyone predicted that it would be impossible to mold these divergent people together, but aside from the skilled men, comparatively few [broke the strike and] went back to the mills."
Workers continued picketing and clashed violently with authorities over weeks, destroying machinery at the mills. At protest parades, demonstrators carried banners demanding not only a living wage but also a more dignified workplace. "We want bread, and roses, too," they chanted, drawing from a populist poem by James Oppenheim called "Bread and Roses."
After weeks of struggle, the American Woolen Company finally agreed to all the strikers' demands on March 12, 1912. Within a few weeks, most other mills had too. Before long, factories across New England also raised pay and shortened the workweek in fear of similar repercussions. The strike is now remembered as among the first in which workers from multiple ethnicities united to improve their working conditions; it was a protest where they demanded dignity in the workplace and won.
* * *
Against this backdrop of economic challenge and labor strife, a young man arrived in Lowell. His name was Athanasios Demoulas. In Greek, athanasios means "immortal." Demoulas, which shares the root "demo" in democracy, carries connotations of one who serves the public welfare.
Athanasios, or Arthur, as he later became known, departed from his native Greece in order to avoid the strife that had already taken his father's life. He was twenty-three when he landed at Ellis Island on St. Patrick's Day in 1906. Rumor has it that his hopes were so grandiose that as he walked the streets of New York City to catch the train to Lowell, he mused that the holiday parade was for him.
His entrance may have felt grand to him, but his story was common for that time. There would be thousands of other immigrants with similar dreams, facing similar obstacles. Throughout the 1800s, the success of Lowell's textile mills drew a steady stream of workers. According to the Lowell Historical Society, more than a third of all Lowell residents at that time were foreign born. They first arrived from Quebec — Lowell was sometimes referred to as Little Canada because of the influx of French Canadians. Subsequent waves of immigrants came from Europe, with a spike in Greek arrivals around the early twentieth century. Athanasios Demoulas arrived toward the end of that Greek wave.
By the time Demoulas arrived, the mark of Greeks in Lowell was already indelible. Greek Orthodox churches had sprung up, Greek coffeehouses had started to appear, and construction had begun on the Greek Holy Trinity Church. Organizations such as the Washington-Acropolis Society formed to advance the fortunes of Greek immigrants. Despite their growing influence in the region, life remained challenging. Greek employees had gained a reputation not only for their hard work but also for being challenging to manage. For a time, Bigelow Carpet Company and others refused to hire people of Greek origin because of a series of strikes thought to be organized by the Hellenic community.
Athanasios settled in the Acre, a section of Lowell nestled near an elbow of the Merrimack River that was being populated by a rapidly growing Greek community. (It is still known by many as "Greektown.") Once he settled in, he sent for his fiancée, Efrosine Soulis, who was waiting for him in his home village of Meteora. They married in 1914. Demoulas first found work in a tannery as a shoemaker. But before long, the poor working conditions in the factory began to affect his health. A doctor advised him to find new work away from the factory setting.
So Athanasios and Efrosine opened a modest grocery — one of a dozen in the neighborhood. Perhaps to give it an air of sophistication, they capitalized the "M" in Demoulas, calling it DeMoulas Market. The shop was located on Dummer Street on the western edge of downtown Lowell. It was frequented by mostly poor and working-class members of the Greek community who picked up meats and other foods on their way to the mills. He also delivered groceries free of charge. In those days, it was common for customers to buy on credit. Especially in immigrant cities, customers would run a tab during the week and then pay the balance on payday. A great number of Demoulas's customers paid this way, making him part grocer, part banker, all the while keeping him closely tied to the fortunes of Lowell's working poor.
The Demoulases worked hard — very hard. Their store was only six hundred square feet, but they were ambitious and hoped to make a name for themselves for their fresh lamb. Workers on their way to the mills began to stop by the store for one of Efrosine's roasted pork sandwiches, a specialty for which she was gaining a reputation. The couple did their own slaughtering.To keep up with growing demand, Athanasios had to make multiple trips per week to the railroad yards to pick up live pigs and sheep. After a few years, they bought land in the adjacent town of Dracut, where they developed a farm to raise cows, pigs, goats, chickens, and ducks.
By outward appearances, the Demoulases were an average, hardworking family, reaching for the American dream. But as Richard Fichera, a thirty-three-year Market Basket associate from Danville, New Hampshire, put it at one of the demonstrations in 2013, "You've never met a family like this."
* * *
Athanasios and Efrosine had six children, four of whom survived past childhood. The oldest was John, born in 1915. Two years after opening DeMoulas Market, they had George. Their third son was born in 1920, and they named him after the son of Odysseus, Telemachus. Roughly translated, his name means "far fighter," foreshadowing the many years of court battles he would one day endure. Ann was born two years later in 1922. They lost a baby girl in 1919 and then Evangelos at the age of five in 1930.
The Great Depression of the 1930s hit doubly hard in the Lowell area, a city already reeling from closing mills and subsequent unemployment. While sales were slow, Athanasios did what he could to help those even less fortunate. He would give poor customers groceries on credit or a free piece of bread with ham. These gestures of kindness left a mark on his sons, especially his son Telemachus, who was already enamored of the grocery business.
Their sense of charity didn't help their cause, however, and in 1938, they faced foreclosure themselves. Cash was tight, as many of the customers who bought on credit had trouble following through on their bills. The bank demanded a $100 payment — about $1,700 in today's dollars. With their cash flow dwindling, this represented the greatest threat to the Demoulas's store since opening twenty years earlier. Athanasios assured his son that he and Efrosine would find a way to reimburse the bank. But the situation was so dire that Telemachus, who also went by Mike, insisted on dropping out of school to help keep the market afloat. They found a way to raise the funds and saved their business.
But the scar of that traumatic experience remained. Remembering how close they had come to losing everything, Telemachus never relaxed for a moment. During World War II, Telemachus's older brother George served in the army. Stationed in Guadalcanal, he joked in his letters home about Telemachus's work ethic: "Please remind him when the day is over because he is liable to work through one of these moonlit nights figuring that it is still daytime."
After the war, George returned, but his immediate plans were not to join the family business; he had dreams of starting a trucking company. However, Telemachus wanted George to join him at the market so that he could expand the business. He saw opportunity beyond the Acre but knew he couldn't do it alone. In the end, George became convinced that joining forces in the market held the most promise for the whole family. He eventually became the business's executive vice president and treasurer.
By 1950, Telemachus and George had found enough success to expand the original store, doubling it in size. Two years later, they made it official. They bought the business from their parents for $15 thousand. Another expansion in 1956 would send sales soaring, and soon the brothers knew they were onto something.
Now that they had honed a winning formula, which combined a wide selection with quality goods and good service, the next phase would be to open additional stores. The Demoulas brothers opened a second store on nearby Bridge Street in the Centralville neighborhood of Lowell, a residential area just across the Merrimack River. It was also a dream come true for Athanasios and Efrosine, who had always wanted the business to stay in the family. Athanasios was there to cut the ribbon at the opening. It was to be his only store opening. The family patriarch died six months later at age seventy-five.
Their father had left a legacy of serving the working families of Lowell by providing high-quality goods with exceptional service. These are the same components of the Market Basket formula we see today. Telemachus and George used these components, together with uncommon tenacity and drive, to build one of the most admired supermarkets in the country.
Everything was in place to catch the supermarket revolution.CHAPTER 2
"They Caught the Supermarket Revolution"
In the early twentieth century, shopping was, to say the least, inconvenient. It was not uncommon for a household to purchase dairy, meats, and produce from three different stores. Each of the specialty stores was heavy on service, with most of the food behind the counter.
But in the 1940s and 1950s, a new type of grocery operation emerged: the supermarket. Industry analysts today classify supermarkets mainly by the number of stock-keeping units (SKUs) they carry; each SKU refers to a different variety of a product. For example, each brand of toothpaste has a variety of flavors or package sizes, each with its own SKU code. Supermarkets carry anywhere between fifteen and sixty thousand SKUs. To put this in perspective, Trader Joe's carries between four and five thousand SKUs, while a superstore such as Walmart or BJ's Wholesale Club might carry on the order of seventy to one hundred thousand SKUs.
Telemachus Demoulas, one of the two brothers who had taken over their parents' grocery store, noticed the trend toward more SKUs and, more than anyone else in the family, saw a tremendous opportunity. The new format required a much larger space than the six hundred square feet they had at the time, but he figured that if they sold enough volume to cover overhead, the model could be extremely profitable. If they could be a leader in this trend, the Demoulas family might even be able to open multiple supermarkets.
The supermarket innovation put a full line of groceries, including meat, produce, deli, and bakery items, under the same roof. And while shopkeepers would collect fruit and other goods for customers from behind a counter in smaller stores, supermarkets brought a new form of self-service to grocery shopping by using the familiar warehouse style we know today: customers pick their own items from the shelves and then check them out at a dedicated cash register.
The new format was a learning experience for eighteen-year-old Claire Ignacio, who took a job as their first cashier. She had to attend cash register school. "This was a whole new thing, a register," said Ignacio, who, at eighty-three, still works a few days a week behind a desk at a chiropractor's office. "The cash registers didn't tell you how to give change in those days. You had to do it yourself." But it was an exciting time. We take it for granted today, but she was a part of something new. "It was the first big market in the area," she said. "A super market."
Even under the new format, the Demoulas brothers maintained ties to the old way of doing things. They continued the practice of selling on credit; customers kept a tab. Another quirk that endured into the supermarket era was the brothers' sale of live chickens. "The Greek people, they didn't want a dead chicken. They wanted to kill it themselves," Ignacio said.
There was at first some apprehension about Telemachus and George's new cashier. Ignacio was of French background, and it wasn't clear yet whether she would click with their overwhelmingly Greek clientele. She had to prove herself, but her bosses created a welcoming atmosphere that she grew to love. Telemachus, she said, was "stern and bossy" but "very kindhearted." George, she said, "was a barrel full of laughs." He taught Ignacio a few key Greek phrases, including "Happy Easter."
Once she demonstrated her loyalty to Telemachus and George and their business, she said, she "won them over." She maintains a special fondness for George, who used to tease her constantly. "George and I were like this," she said, interlocking her index and middle fingers. "They were special," she said of the brothers.
Excerpted from We Are Market Basket by Daniel Korschun, Grant Welker. Copyright © 2015 Daniel Korschun and Grant Welker. Excerpted by permission of AMACOM.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
PART O N E 1
1. “You’ve Never Met a Family Like This” 5
2. “They Caught the Supermarket Revolution” 13
3. “Learn the Business, Young Man” 29
PART TWO 41
4. “People First, Groceries Second” 43
5. “Blood Makes You Related, But Loyalty
Makes You Family” 55
6. “You Do Whatever It Takes to Get the Job Done” 69
7. “We’re Not Normal” 79
PART T H R E E 89
8. “A Predetermined Assault” 91
9. “All In” 103
10. “Shut It Down” 117
11. “Stick Your Neck Out” 125
12. “Market Basket Strong” 137
13. “The Final Straw” 149
14. “Hostages” 159
15. “I Am in Awe of What You Have All Accomplished” 169
PART FOUR 177
16. Challenges Ahead 181
17. Lessons 189
Authors’ Note 205
Appendix A: Arthur T. Spars with Arthur S.
and Gerrard Levins in 2012 207
Appendix B: Arthur S. Spars with William Shea at Board Meeting in 2003 209
Appendix C: More Sparring at
Board Meeting, June 25, 2003 211
Appendix D: Who Is Market Basket? 214
Most Helpful Customer Reviews
Presents a non-biased accounting of the events leading to the Market Basket shut down, during the shut down, the culture of the company and environment created between the company, it's vendors and customers. Told in a clear and easy unfolding of events and information. A must-read for better understanding of corporate purpose. Clear evidence that a business is not always just about making a quick profit for the shareholders and what can happen when enough believe in a better way to conduct business.
I freaking love Market Basket. I work there and am in high school and i am excited to go to work. They treat everyone like family and the store manger at my store is kind and leads his staff with passion and acceptance. The Front End Managers make every shift awesome and i promise that everytime you go into a Market Basket store that you will be greeted with smiling faces. I hope that you will learn to love Market Basket as much as i do.#store#22