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Market Basket dispute resonates outside stores

New Hampshire Union Leader

July 22. 2014 7:37PM

Kim Brown of Bedford picks up corn on the cob at Harvest Market in Bedford on Tuesday. Area grocery stores report brisk business in the wake of Market Basket's internal strife. (DAVID LANE/UNION LEADER)

MANCHESTER — Market Basket’s high-profile dispute between its workers and the company’s board risks causing serious financial harm to the supermarket chain, according to a University of New Hampshire professor.

“The chain has sort of taken a critical blow and soon, and I don’t think this moment is very far away, you’re going to have to put it on life support,” Neil Niman, UNH’s economics department chair, said Tuesday.

Thousands of Market Basket workers attended a rally Monday and are urging customers to boycott stores in an effort to pressure the privately held company to bring back former CEO Arthur T. Demoulas, who was ousted by his cousin, Arthur S. Demoulas.

“I think Arthur S. and his cronies made a big mistake,” Niman said.

Mike Bourgoine, who heads the Associated Grocers of New England, which is seeing increased sales at four stores it owns, said he has worked in the grocery business since 1970.

“In New England, I’ve never seen anything remotely that’s close to what’s going on with Market Basket in regards to this situation,” Bourgoine said. “You can’t dream this stuff up.”

Marc Dixon, associate professor of sociology at Dartmouth College who has written about the labor movement, said the fight is unusual because it’s not union-motivated and includes many managers backing the rank and file.

“It certainly seems the momentum is on the side of the protesters,” Dixon said.

Niman said Arthur T. Demoulas created “an environment where the people are happy to go to work every day and that is rare in business today.”

At Monday’s rally in Tewksbury, Mass., Allen Pelletier, 33, a grocery manager at the Market Basket in Seabrook, said workers want to preserve the company culture.

“It’s not a job; it’s family,” said the 17-year employee who hopes to retire from there in another 24 years. “I love going to work.”

Niman said many employees started and ended their careers at Market Basket, which is unusual in today’s economy.

“The value that’s created in Market Basket and their ability to outcompete everybody else in the same space is because of the quality of their employees,” he said.

“What’s different with Market Basket is most of their managers worked their way up through the ranks, so they have a natural affinity for the rank and file who are for the average Market Basket worker because they started there,” Niman said. “That’s part of the dynamic that is leading them to band together.”

Last December, Forbes estimated that Market Basket, which operates about 30 stores in New Hampshire, had annual revenue of $3.55 billion. Other published estimates placed that number in excess of $4 billion annually.

Competitors are reaping the sales benefits as shoppers seek alternatives to vacant shelves at Market Basket stores around New Hampshire.

Bourgoine said sales started picking up Sunday at the four stores: Sully’s Superette in Goffstown, Vista Foods in Laconia as well as Harvest Market locations in Hollis and Bedford.

“It started more on the perishable side because that’s what they were running out for products first,” he said, namely meats, produce and fish. And it has spread to items you’d find elsewhere in stores.

A spokesman for Hannaford said Monday that the supermarket chain also had recorded increased sales in recent days but declined to cite specifics or attribute it to the Market Basket dispute.

Niman said the Market Basket board could sell itself to a national chain or buy out one side of the Demoulas family.

“I think the smart thing would be to reinstate Arthur T. and then work out some plan to sell their shares in the company,” he said. “Now, they’ve put their entire business at risk and the value of their individual stake is dropping dramatically.”

Niman, a Market Basket customer, said he isn’t sure the chain would permanently lose a large chunk of its customer base if it resolves the dispute soon. “Their price differential is so large it’s not going to take me very much to return to Market Basket,” he said.

Bourgoine called Market Basket a “very respected, well-run competitive company. I’m sure they’ll figure out a way to entice those customers to come back.”

Niman said he thinks it would be difficult to replace some or all of Market Basket’s workforce. “I’m not sure they’ll be able to recreate what I say is the Market Basket magic,” he said.

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