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Market Basket exterior

A dramatic year for a family-owned grocery chain is coming to an inauspicious end, with the supermarket ending a popular discount program, and refusing to rule out future price hikes.

In January, Massachusetts-based Market Basket introduced a flat 4% discount on shoppers’ grocery bills for the rest of the year, as “a reward for its loyal customers.” Receipts displayed the amount saved on each individual item, as well as the total 4% savings on the entire transaction.

Over time, for many shoppers, that extra 4% off really added up. According to U.S. government estimates, a 4% discount would have saved the average family of four more than $500 by the end of the year, or enough to get two weeks’ worth of groceries for free.

“Ingenious,” “aggressive,” “amazing,” retail analysts said of the yearlong discount, which was virtually unprecedented in its scope, compared to other supermarkets’ here-today-gone-tomorrow promotions.

But now the year is up. The 4% discount, which was scheduled to last through December 27th, will end today as planned.

“We had a commitment to run it through December 27 and we stayed true to it,” director of operations David McLean told the Boston Globe. But with wholesale prices on the rise and the company in debt, extending the discount “wouldn’t have been tenable.”

Most Market Basket shoppers expressing their opinions online, and interviewed by various New England news organizations, were grateful for the 4% discount while it lasted. But others were disappointed that the discount was not extended. That was the risk Market Basket faced, by offering such a long-standing discount to begin with. After a whole year, many shoppers became so accustomed to their 4% savings, that ending the discount essentially amounts to a 4% price hike.

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And more price hikes could be on the way. McLean said the company is doing everything it can to insulate customers from rising costs, but he allowed that shoppers could eventually see a bump in prices.

Even so, that would be a small price to pay, for loyal shoppers who once feared they wouldn’t have a Market Basket to patronize at all, after the events of this summer.

Five months after Market Basket CEO Arthur T. Demoulas introduced the 4% discount, he was fired by the company’s board of directors, led by his cousin Arthur S. Demoulas. That set off an epic battle for control of the company, with customers and employees alike taking sides – most of them, expressing loyalty to Arthur T., and many of them refusing to shop or work there until he was reinstated.

After two months, during which shelves emptied for lack of deliveries, and the company bled cash for lack of customers, an agreement was forged to sell the company to Arthur T. He formally gained control earlier this month.

Under different circumstances, the 4% discount might have been extended for another year. But as the company tries to regain its footing after its dramatic summer, and under new ownership, all it can do now is promise to keep prices as low as possible – and even if they go up, they’ll still be lower than many of Market Basket’s higher-priced competitors.

“We’ll miss it,” one shopper told New Hampshire’s WMUR-TV about the 4% discount. “But we’re not going to stop coming here.” “I think it’s gonna work out just fine,” another shopper told Boston’s WFXT-TV.

The profitable company lost a lot of money during this summer’s standoff, and Arthur T. had to take out a lot of loans to buy out the board of directors. In fact, according to the Boston Globe, the interest rate on Market Basket’s newly acquired debt is – you guessed it – about 4%.

“The customer needs the savings more than the company needs the extra profits,” Arthur T. said in January, upon introducing the 4% discount. Today, it seems, the biggest beneficiary of a 4% discount could be Market Basket itself.

Image source: DeMoulas Market Basket

One Comment

  1. Market Basket did not raise their prices overnight, the 4% discount was taken off at checkout, the end date for this event was 12/27. Prices on the shelf stayed exactly how they were.

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