The 4-percent discount program at Market Basket grocery stores, now three weeks old, is proving popular among consumers, but not necessarily with part-time employees, some of whom say their hours are being cut to finance the promotion.
While Market Basket management has declined to comment, the president of the state's grocers association says that Market Basket is certainly not alone in cutting back on shifts during this time of year, and the reductions may not be directly linked to the promotion.
The promotion was announced in a press release by Market Basket management on Jan. 13.
"The additional 4-percent off promotion is a reward for our loyal customers and an investment towards a long-term growth strategy to attract new customers, increase sales and continue to strengthen and build Market Basket's brand identity," management said in the release.
Anticipating that consumers would suspect a price increase to offset the discount at the cash register, the company added, "Market Basket will continue to keep existing prices low and continue to feature a large variety of weekly specials in its circular."
The 4-percent discount, which runs until Dec. 27, doesn't require a loyalty card or minimum purchase and applies to everything except beer, wine, cigarettes, milk, town trash bags, lottery tickets, postage stamps and gift cards.
Judging from their comments on two very active social media sites - We Are Market Basket and Save Market Basket (Facebook) - employees generally agree that the prices have held steady. They are less than united on the impact the promotion has had on staffing.
Some complain about their hours being cut, and blame the promotion, while others stand behind the management team that has implemented the program.
The Boston Globe editorialized on Jan. 28 that the promotion would amount to $400 in annual savings for a family of four. "At a time when many grocery chains are boosting margins with prepared foods and higher-priced organic brands, Market Basket's concern for the average family is striking," the Globe wrote.
The discount has been praised as particularly worthwhile for low-income families in light of reductions in the Supplemental Nutrition Assistance Program, commonly known as food stamps. Arthur T. Demoulas, the company CEO at odds with his board of directors, was named citizen of the year by the Lowell Sun.
The board has distanced itself from the program, referring all questions to management.
When Susan Miller, a part-time employee at Market Basket in the Nashua area, sent an email to director Ronald G. Weiner, asking how the company was covering the 4-percent discount, he replied, "Management did not consult me or the board prior to announcing the promotion and has not informed us how management plans to cover the costs of the promotion. Please ask management directly."
A divisive issue?
The discount program may eventually prove to be a "wedge issue," dividing the grocery store rank-and-file that up to now have been united in their support for incumbent management. They have been virtually unanimous in viewing the struggle for control of the company as a clear case of "good guy" (Arthur T. Demoulas) versus "bad guy" (Arthur S. Demoulas).
"Some of the customers want to know who is paying the bill for all of this," wrote Miller in her email to Weiner. "It is not good PR to make your hourly help foot the bill."
In letters to the attorneys general in New Hampshire and Massachusetts, and to the Department of Labor in Concord., Miller has pressed the issue as a question of fairness, while acknowledging there is little likelihood of intervention by any federal or state agency.
"I have been employed with Market Basket in New Hampshire for some 17 years. I am a part-time employee with no benefits," Miller wrote in an email to the attorneys general on Jan. 20. "When I went to work the other day I was told that my hours were being reduced because the store that I work at had given away $25,000 to the public as part of the 4-percent customer rebate promotion. I could not get a factual answer from anyone other than the fact that all the part-time people have reduced hours. My department had to reduce its hours by 32. The grocery clerks are being scheduled as little as 10 hours per week."
Another employee, asking to remain unidentified, wrote to the Union Leader, "While this seems like a generous way to give back to customers, it comes at a price. At a time where hiring of full-time positions have all but ceased, the bill for this 4-percent back is being left in the hands of the hourly employees, not the owners and not the board members."
On the Market Basket social media sites, most posts are in support of management's decision to launch the promotion.
Robert Long, a full-time grocery clerk in Hudson, wrote on Feb. 2, "Taking 4 percent off each customer's order is definitely going to lure more customers in which will result in larger profits down the road. Clearly he (Arthur T.) knows what he is doing. He knows how to keep a business growing.
In order to build and maintain higher success in the long run, you need to expand and spend when there is high business. Market Basket keeps climbing the ladder of success."
Creating an advantage
John Dumais, president and CEO of the N.H. Grocers Association, said the Market Basket promotion is just another sign of a highly competitive business that has seen the demise of 12 large grocery stores in New Hampshire in just the past year.
Dumais said the difference in pricing among the big stores is marginal, and so the stores are seeking every angle to create an advantage. The cycle of competition only benefits the consumer in the long run, he said.
"The bottom line is that these competitors are within pennies of each other for what they have to offer, and some can actually beat the Market Basket scenario, so they (Market Basket) raised the bar," he said, predicting an acceleration of what amounts to a price war.
"The others will address that, and meet the challenge," he said.
Market Basket, Shaws and Hannaford are all members of the NH Grocers Association.
The average profit margin in the grocery store business for large chains is in the 1-percent range, Dumais said, so not many could cut prices by 4 percent without affecting profit unless there was some cost-cutting elsewhere.
Market Basket may be in a unique position to offer the discount because, unlike many grocers, it has paid cash for new stores, owns and does not lease most of its properties, has a small upper management group and until recently had no debt.
"Those are big factors," said Dumais. "However it's being done, the winner is the consumer."
Not all Market Basket employees feel like they are among the winners in the promotion, but Dumais said they are not alone in having hours cut back.
"I'm quite aware of a lot of the retail merchants in the state, and I know a lot of them have cut back on part-time employment, total employment or labor hours," he said.
"This is a difficult time of year, so if the sales aren't there, you have to trim your cost any way you can."