Expert Column: Market Basket’s Lessons for Retailers

A billion-dollar family business has been rocked by the voting out of an "enemy" relative whom associates happen to love. That's the story of Market Basket, the Tewksbury, Mass.-based grocery chain of 71 stores with some 25,000 employees throughout New England.

A groundswell of popular support –- rallies, strikes and protests attended by thousands of loyal workers –- has followed the firing of Arthur T. Demoulas, the company's former CEO. Arthur T. was replaced in June by a board now controlled by his cousin, Arthur S. Demoulas, a rival heir to the company built by their Greek immigrant grandparents, who opened their first store in 1916. Although the stores remain open, shelves are virtually empty because warehouse drivers and outside vendors have refused to make deliveries. Customers have taken to social media to show their support for employees' efforts to get their boss back. The company is losing millions of dollars per day.

The Market Basket phenomena has rocked corporate America to the core and left many shocked and bewildered. How can employee loyalty backfire like this?

There are several critical takeaways from what's happening at Market Basket. Leadership should take notice and make sure that these lessons are reviewed and discussed in forthcoming team meetings:

Keep your ear to the ground: Call it a "win one for the Gipper" or their "Norma Rae" moment –- people have a tendency to stand up for the underdog. And the crowd influence of social media can magnify that fight for injustice like nothing else. Companies need to understand just how quickly discontent can become a rallying cry that can affect performance and potentially damage the brand.

Listen to your team, and address concerns early on. Clear and tangible strategies that drive employee satisfaction and engagement are critical, as are honest communication and nimble response. Feeling valued and respected is one of the key requirements for a truly engaged employee. Cultivating employee loyalty starts at the individual level, but it's also critical in optimizing the group dynamic of your work force. Talented, dedicated and tenured staffers within the grocery industry take exceptional pride in their contribution to serving "their" customers. Management shouldn't miss this reference, and should acknowledge and reward accordingly to ensure a team dynamic versus an individual contributor mentality.

The grocery business has gone through multiple evolutions recently –- big-box competition, one-stop shopping, and the like –- which require a conscious and disciplined strategy to ensure management and front-line staff are not only listening to their customers, but also listening to each other. Getting employees involved and rewarding their ideas on how best to satisfy customers will prove fruitful in the best grocery model.

Customer loyalty is directly correlated to employee loyalty: Most successful retail organizations allocate significant budget to support customer loyalty and engagement programs. Many, however, don't appropriate a significant amount of resources to drive employee loyalty and engagement. Organizational cultures that don't focus on motivating, training, engaging and rewarding their employees have little chance of achieving the optimal customer experience.

All of the customer loyalty initiatives in the world can't overcome a disgruntled, disengaged work force. The coupons, price breaks and corporate pleas didn't stop Market Basket customers from pushing their carts into competitors' stores, much less lining up behind the boycotting employees. How you treat your employees directly affects how your employees treat your customers.

Also, go the extra mile by engaging, incentivizing and rewarding your employees who do. You’ll be amazed at the impact. I recently went to a grocery store that proactively assisted those identified as being need of assistance –- elderly, disabled, mothers with small or multiple children –- by taking their carts to their cars and loading them up. That experience was felt not just by the individuals in question, but also by those around who witnessed it and those who went on social media to comment favorably on it.

Get back to basics, where everybody knows your name: Since we spend an inordinate amount of our lives at work, our environment matters. Employee satisfaction and loyalty aren't driven just by robust reward and recognition programs; their root causes are more basic and much less expensive than that.

We saw this first-hand with the Market Basket situation. Employees are loyal to a CEO who knew their names, asked about sick family members, sent notes on the occasions of graduations and weddings, and gave a pat on the back and praise for a job well done. Not to dilute the value of equitable wages and well-developed recognition programs, but Arthur T's leadership is the driving force for these employees: They're willing to risk their livelihoods for a leader who took the time to develop personal relationships with them.

Successful customer and employee loyalty programs today must include personalization as a fundamental element. We all want to feel special, that we are worth taking the time to get to know, and that we can make a difference. What we see at Market Basket is just how powerful this connection can be for employees as well as customers: It makes all the difference in the world.

Successful retail customer engagement involves creating a personal and emotional connection, and everyone wants to feel like they have a "neighborhood" grocer, even if they shop at a big-brand retailer. People will pay a little more for the butcher who's willing to cut the fish or meat exactly how they like it, or the associate in produce who quickly runs out back to check on additional products you don't see on the shelf.

C-suite executives everywhere should be convening emergency meetings to inventory their employee and customer loyalty strategies. If you have no strategies, or have words on paper that haven't translated to the fabric of your culture, you should consider re-prioritizing your efforts in the wake of the Market Basket experience.