Market Basket Reduces Shrink 22%

Company Background – Market Basket Foods

Founded in 1961, Market Basket Foods is a privately-owned and operated conventional grocer serving the East Texas and Louisiana with 33 full-service supermarkets. Market Basket supermarkets offer full variety of grocery foods including fresh produce, quality meats, fresh bakery goods and floral departments. Market Basket employs more than 2,000 supermarket associates.

The Profit Challenge

Market Basket Foods faced challenging economic conditions and increased competition from chain store grocers many times its size. While profitable, Market Basket wanted to improve its financial performance and its competitive market position. The leadership team at Market Basket established 4 aggressive goals: (1) reduce store shrink 15%, (2) improve store manager effectiveness to drive store profit 10%, (3) improve perishable department sales, penetration and profit, and (4) improve store supervisor effectiveness.

Strategic & Tactical Implementations

Market Basket President Sky Thompson selected the Retail Control group, lead by Larry Miller, to conduct an initial store operations and shrink loss control “needs assessment”. Following a detailed companywide and store level ‘current practices’ review and store manager and supervisory staff interviews, the consultant team from the Retail Control Group presented the Market Basket Executive team with a “Findings & Recommendations” report. Following, the Retail Control Group was selected to lead a shrink reduction and profit improvement initiative at Market Basket. Specific to this initiative were 4 core programs: (1) The Total Store Manager training program, (2) The Professional Store Supervisor training program, (3) Vision, Standards and Internal Brand development, and (4) Internal Store Operations Excellence Audit. Scope of work included customization, training and 12-month implementation effectiveness assurance for execution and accountability.
Based upon excellent program follow-through and best practices execution, Market Basket reduced store shrink 22% and exceed its annual profit improvement goals in just 22 weeks achieving a 5:1 ROI in the first 6 months and is on track to sustain [and exceed] these gains for year one.

Store Operating Improvement Results

Based on pre-implementation benchmarks, store operating results improved to EXCEED project goals. Below are the audited and verified performance improvement results achieved as measured across 33 Market Basket stores, in just 22 weeks.
Total Perishable Shrink Reduction DOWN 29%
Total Non Perishable Shrink Reduction DOWN 31%
Increased Meat Sales UP 5.4%
Increased Produce Sales UP 9.1%
Produce Gross Margins UP 6%
Increased Cash Flow $700,000 in the first 5 months
Cost of new technology $0


According to Steve Cormier, Market Basket Vice President of Operations:

We are closing our fiscal year-end and this will be our most profitable year in our company’s history. In a tough economy, our sales are up, our shrink is down and our grosses are stronger than ever. Our stores look better and fresher, and our Store Managers are embracing the Total Store Manager® program with great enthusiasm. They are completely engaged at levels of store operations beyond all previous levels and our ROI was over 500% in the first 6 months.

Our supervisors really enjoy the challenging aspects of the Professional Store Supervisor® program. They have all set a new and higher bar of expectations by creating growth-based Visions in every department supported by new and focused store operating Standards. We always worked well together but we now have a higher level of supervisory collaboration and teamwork that is refreshing and yielding wonderful results.
Overall, we are having a banner year! And, there is no doubt or debate: Our results are due in very large part to the Total Store Manager® and Professional Store Supervisor® programs of The Retail Control Group.