Friday, August 8, 2014

A PATRIOTIC BUSINESS MODEL

This is message to all those "carnivorous" profit grubbing nay sayers out there who claim that business that don't put profits first can not survive in a free market capitalistic economy.


Demoulas' fast-growing Market Basket chain is something of an enigma: It posts higher margins than its competitors, but by many accounts pays its employees better, sets its prices lower and treats its vendors like cousins.


"We're in the people business first and the food business second."


At this very well-regarded family company, employees are picketing to protest the board’s firing of CEO Arthur T. Demoulas. Shelves are largely bare, and suppliers are being hurt by the slowdown. Many shoppers are not crossing the picket lines. The company’s newly appointed co-CEOs are trying to replace striking employees; some 25,000 jobs are at stake, but employees are holding the line. Politicians and government officials are weighing in.

This high-stakes, riveting story obviously teaches us a lot about the vulnerabilities of family companies — but it’s also a good reminder of their strengths. It is important to keep in mind that family business, a largely silent sector of market capitalism, is also the biggest sector, accounting for two-thirds of all businesses in the world, and about half of the largest companies in the United States. Studies done in a number of countries indicate that both public and private family companies perform, on average, significantly better than non-family businesses. They are stronger financially, have higher stakeholder loyalty, live longer, and are more trusted by the public. These company strengths have a lot to do with their family ownership and family leadership. And this is also true at Market Basket.

The now-former family leader of Market Basket, Arthur T. Demoulas, built an impressive and extremely loyal employee group. What company wouldn’t love to have frontline employees striking to support their CEO? The same goes for the cult-like loyalty of Market Basket customers.


Here, in Demoulas' own words, are 11 business principles that Market Basket runs on.
1. Everybody carry a notebook.
Dad taught us, God rest his soul, my dad Mike Demoulas, you know, he carried a notebook and a pad of paper and a pencil, and you walk around the store — just what we're going to do. We're going to talk to customers, talk to our great associates here and make a note of things that happen and you follow up on it.
2. Stay close to the customer.
You get away from being close to the customer, you've got a problem. You don't understand what they want. You're sitting some place in an office, not really knowing what's going on on the playing field and what is the true sense of that customer. And you lose touch. You lose touch with the comments, the input, the real touchy-feely of the company. You can never get close enough to the customer in any business.
3. Love your vendor
All the vendors, they're experts in their own area, whether they're selling bags of lettuces or spices. We're all ears on how to learn and what the latest trends and the latest knowledge in these various things. ... The extra monies, the deal monies from vendors that we work out is passed on through the system, all for the cost of goods sold, so we can lower the price for the customer.
4. Massage the business
You get a great first-hand sense of what people want, and you keep massaging your business, product by product and service by service. It's a never-ending, ongoing thing.
5. Promote from within
We do all of our promoting from within. We start out bagging groceries and shagging carriages and cutting boxes in the back room and doing the things you do in a supermarket — 99 percent of our people come from within the ranks.
6. Mind the store
Growth isn't our biggest hunt. Our biggest hunt is maintaining what we have. We talk about it in meetings all the time. The most important thing is taking care of the customers that have been loyal to you over the years.
7. Think small
Putting a building up is easy — the difficult thing is bringing the Market Basket culture. ... We don't want to open a nice big store like we do and not have the same feeling that you have in the store here. And that feeling that we always want to present is being your local grocer. ... We try to create a mentality that hey, you run the place like it's a one-store operation.
8. Let people get in the way
A lot of people over the years have stocked their stores overnight, like on night crews. We prefer to stock during the day. Now, a little bit inconvenient having a palette in the aisle? It is. But you know we'd rather have a human being, customers saying, can you reach that for me? And what about this? ... We're in the people business first and the food business second.
9. You get two identities
As a retailer you have to have a couple of identities that you're very potent with. You takeWhole Foods. You think Whole Foods, you're natural foods and pristine merchandise. ... You've got to stand for something. What Market Basket stands for is best people, best price, without sacrificing the quality, the variety and the shopping experience at large.
10. No gouging
We have a pricing policy that is one pricing policy in all 71 stores - whether you're in Bourne, whether you're in Chelsea. ... Now there's competitors – won't mention any names – that you can buy this product right here (picks up a sleeve of plastic cups) and this product is $1.29 here, you can go down to the Cape, one of their Cape stores, you're going to your summer home or whatever, and they're selling this for $2.29. Hey, I mean, how fair is that?
11. Think about real estate
We have a pretty good sense of what feels right. Our track record is pretty much 100 percent when it comes to that. My dad had a good eye for a spot. It's in part the strength of the formula, and part the location, but you look for spots that has good access and the right parking and the right reach — of course, being close to people and highways is very good. We probably go about it in the least sophisticated way as you would think. It's nothing more than driving to the lot on different days and different hours of the day, seeing the traffic and sizing things up with your senses.