Three years after Market Basket touted the success of its Biddeford store and hinted at further expansion into Maine, the popular New England grocery chain has yet to open a single new location in the state.

Supermarket industry analysts say a combination of changing market conditions – including an increasing number of shoppers buying groceries online – and the company’s diminished financial strength from a shareholder buyout in late 2014 have likely put Market Basket’s Maine expansion plans on hold.

“I think that over the past couple of years, the appetite for adding square footage has just diminished,” said Leon Nicholas, chief insights officer for Boston-based Kantar Research.

However, a Market Basket senior executive said that the company has continued to expand in Massachusetts and New Hampshire since the buyout, with at least two new locations opening each year, and that Maine is still being considered for future stores.

Demoulas Supermarkets Inc., the Massachusetts-based company that owns and operates Market Basket grocery stores, opened the Biddeford location in August 2013. After several months of strong sales in Biddeford, Demoulas Operations Manager David McLean told the Portland Press Herald in March 2014 that the company was eyeing other potential sites in Maine.

But since then, Market Basket has made no mention of further expansion in the state. McLean said Friday that while the company has no specific plans to open another Maine store, it remains impressed with the Biddeford location’s sales. Some customers at the Biddeford store come from as far as an hour’s drive away to shop there, he added.

“Nothing (else) has come up in Maine, but it’s certainly an area that’s still on our radar,” McLean said.

Supermarket industry analyst David Livingston, owner of Wisconsin-based DJL Research, said a likely reason for the stalled Maine expansion is a management shake-up in 2014 that led to customer boycotts and culminated in a shareholder buyout. It started with an old family feud that escalated to a battle of wills between the grocery chain’s employees and executive leadership.

In the summer of 2014, Market Basket enraged many of its roughly 25,000 employees by firing their beloved longtime CEO, Arthur T. Demoulas.

Workers at all levels, from grocery baggers to district managers, spoke out in opposition to Demoulas’ ouster by the company’s board of directors, made up of family members who shared ownership of the privately held chain.

Employees said they supported Demoulas for his personal touch, his vow to keep the chain family owned and his commitment to support a company fund that pays annual bonuses to employees. They worried that the new leadership would cut pay and benefits, despite assurances that it remained committed to customers and workers.

A cousin of Demoulas who controlled the board at that time led the push to remove him as CEO following a decades-long dispute over ownership rights and a difference of opinion about the company’s rapid expansion.

In response, workers posted signs and placed petitions inside Market Basket stores to garner public support for Demoulas’ reinstatement. They protested by refusing to make deliveries, leaving parts of the produce and fresh meat sections understocked or empty in stores. Customers followed suit by vowing to shop elsewhere until Demoulas was given his job back.

In December 2014, the dispute was resolved and the boycott lifted after Demoulas announced that he had completed a buyout of the 50.5 percent of the company he hadn’t previously owned, and that he would be returning to the position of CEO. He immediately issued a total of $49 million in bonuses to company employees who had weathered the turmoil.


But Livingston said the buyout likely saddled Market Basket with a significant financial burden that limited its ability to invest in expansion. While Demoulas did not disclose the price he paid, analysts and company insiders at the time estimated it was roughly $1.5 billion.

“What I am guessing is that it probably took a lot of capital or debt to get control of the company,” Livingston said. “It might have been a wake-up call as well that they need to be realistic on their labor expenses. If I recall, the CEO was quite generous and this did not go over well with other family members.”

McLean disagreed, noting that Market Basket has opened at least two new stores each year since the buyout, primarily in Massachusetts.

“If we weren’t opening new stores, I think that (buyout hypothesis) would carry some weight,” he said.

Nicholas, the Boston-based analyst, agreed that the buyout probably placed Market Basket in a weaker financial position, but he said there is an even bigger issue that has likely stalled the company’s expansion in Maine.

Since 2014, supermarket chains across the U.S. have scaled back plans to build additional stores and have instead shifted the focus to strengthening sales at their existing locations, he said.

Nicholas attributed the shift to intense competition and a growing segment of the consumer base that has begun buying groceries online.

“The slowdown in new development is certainly happening across the board,” he said. “It’s not a market where you’re looking at tremendous opportunities.”

Nicholas noted that the two exceptions are dollar stores and high-end boutique stores.

According to a survey in November by Ohio-based Prosper Insights & Analytics, 7.7 percent of U.S. consumers said they had shopped for groceries online in the previous 30 days, up from 5.7 percent two years earlier. One out of 10 millennials and members of Generation X said they had purchased groceries online in 2016, up from 8.4 percent and 6.8 percent, respectively, in 2014.

The threat of lost sales to e-commerce has led many grocery chains, including Scarborough-based Hannaford Supermarkets, to invest in new technology and services such as online ordering, home delivery and/or curbside pickup.

“You’ve got a tremendous amount of volume being taken out of stores and going online,” Nicholas said.

Even leading retail chains that previously appeared unstoppable have cut back. Minneapolis-based Target Corp. reported Tuesday that its profit for the quarter that includes the holiday season fell 43 percent, with strong online sales failing to offset weaker business at its stores, according to The Associated Press. Target’s stock immediately fell by more than 12 percent, and other retailers dipped as well.

In light of that news, a rumored expansion of the Target in Topsham into a much larger Super Target with a full-sized grocery store is unlikely to be true, Nicholas said. Target has not responded to requests for comment on the rumor.

McLean said Market Basket also is investing money in store upgrades, but that the company hasn’t noticed a significant customer shift toward online sales. He estimated that only about 1 percent of Market Basket shoppers purchase groceries online.

Another likely impediment to more Market Basket stores in Maine is that the state’s supermarket sector is fairly saturated, Nicholas said.

“There’s not a lot of underserved market area,” he said, “and the population isn’t growing that much.”

McLean agreed, but added that market saturation is a problem all over and not just in Maine. He said Market Basket’s real estate division continues to evaluate potential expansion sites each year based on factors such as demographics and competition, and that it simply has not chosen to move forward on another Maine location since Biddeford.

“I think down the road we will continue to look at sites in Maine,” he said.

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