Retail Lessons: Ripped from the Headlines

Bill McCurry

It’s summer 2014 and two cousins are continuing their fathers’ fight over the store chain their grandfather started. This tale delivers a lesson every successful retailer must learn: It’s all about how you treat people.

In 1917, Arthur Demoulas opened a grocery store in Lowell, Massachusetts. In 1954, he sold the store to two of his sons, Mike and George. Within two years, sales grew from $2,000 to $900,000 a year. Fifteen years later, it was a 15-store chain. George died in 1971 leaving Mike CEO of Market Basket.

The lawsuits started in 1990 (read about them here: www.mydemoulas.net/history/). In 2008, Mike’s son, Arthur T. took over control from his cousin, Arthur S. Demoulas and grew the chain to 73 stores in Massachusetts, New Hampshire and Maine—a $4-billion enterprise with 25,000 employees.

So what does this have to do with your garden center? The lesson for us is what happened when the board fired Arthur T. this summer. Cousin Arthur S. brought in new management. Life went on—for less than 24 hours. Then the employees went on strike, along with ancillary workers, drivers and suppliers. Customers pasted competitors’ receipts on Market Basket windows.

Let’s stop here and think about your garden center. If the board suddenly ousted you, how would your employees react? What would your customers do? Would they be marching together with signs demanding your return?

At Market Basket, management threatened to fire everyone. Two governors stepped in, trying to end the stalemate. Financial pundits wrote the chain’s obituary. After two months, Arthur T. bought out his cousins for $1.5 billion.

Immediately, employees returned and worked non-stop over the Labor Day weekend to restock the stores. New customers, intrigued by the controversy and low prices, joined faithful customers. Business pundits fell silent.

What makes Arthur T. engender this kind of fanatic loyalty? Sure, the starting salary is at least $4 more than minimum wage, with health care and sick leave provided. After working 1,000 hours in a year, you’re eligible for profit sharing. Maybe those numbers are out of sight for you, but employees will tell you it’s really Arthur T.’s management style they were unwilling to give up.

Arthur T. Demoulas is a hands-on executive who remembers associates’ names, birthdays and milestones. He attends weddings and funerals, inquires about spouses and children and checks up on how you’re doing when you’re ill. His thousands of employees regard him as a father figure who puts loyalty over profit—and in the process earns both.

Would your employees jeopardize their financial security to support you or would they shrug and work for whoever signs their paychecks? Would your customers stand with your staff or would they go elsewhere? How well do you understand your community and put their interests on a par with your bottom line? Are customers loyal because of your high-quality products and exceptional service or do they stop by just to compare your prices with other suppliers?

And then there are the folks who work with you. What do you do to recognize them? It can be as little as a sign at the entrance—“Today is Sally’s birthday. Let’s make it special!” Add a picture so everyone recognizes Sally’s face. Do you encourage your staff, making them feel like an important part of the center’s success?

The story of the strike that turned around a multi-billion dollar company will be taught in business schools for decades. These aren’t high-end grocery stores. They serve lower-income neighborhoods with cheap prices but high-class service. Every customer is greeted as a person, not a number on the cash register. When asked about the lack of self-checkout registers, Arthur T. said. “I want a human being waiting on a human being.” Old fashioned? Sure, but it works!

Next month we’ll turn the full spotlight back on garden centers. This month, let’s give a tip of the hat to—and take a lesson from—Arthur T. Demoulas and his chain of “cut-rate” grocery stores. GP

Bill would love to hear from you with questions, comments or ideas for future columns. Please contact him at wmccurry@mccurryassoc.com or (609) 688-1169.