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    Basket Case

    The Demoulas family’s failure to establish détente for the good of the company, its employees and loyal shoppers has the potential to sink the entire enterprise.

    By Jim Dudlicek, EnsembleIQ

    There’s been a lot of noise in recent weeks about a retailer that’s notoriously quiet about how it operates. But its historic public silence belies the storm that rages within its corporate walls.

    The ongoing family feud at Tewksbury, Mass.-based Demoulas Supermarkets, which dates back to the 1970s, hit a breaking point in late June when company board allies of Arthur S. Demoulas ousted his cousin, CEO Arthur T. Demoulas, and several of Arthur T.’s compatriots.

    Since then, there’s been a new wrinkle: Late last month, Arthur T. offered to purchase the 50.5 percent of the company controlled by his opponents. In expected fashion, the company, which operates more than 70 stores in New England under the Market Basket banner, isn’t commenting on the proposal or its potential value. But Bill Marsden, the grocer’s ousted director of operations, told PG Managing Editor Bridget Goldschmidt that Market Basket is worth $4.3 billion.

    Big dollar amounts notwithstanding, Market Basket is not only valued but also truly beloved by its shoppers, who are so devoted to the banner that they launched their own website to express their love for the chain and spread word of its latest specials. The company has only a minimal Internet presence of its own; a basic corporate site with a general media e-mail contact appears to have gone dark. I once reached a category manager at his desk by phone, and he sounded truly astonished that I was able to get through.

    These attempts to isolate itself from the outside world could make it difficult to believe this company could engender such affection. But the latest goings-on have certainly incurred the public’s wrath.

    Arthur T.’s ouster has sparked rallies of employees fiercely loyal to him, at least one online petition signed by thousands demanding his reinstatement, a “Save Market Basket” Facebook page, and a call by Massachusetts and New Hampshire politicians to boycott the chain’s stores in protest. Additionally, eight employees were reportedly fired for organizing events supporting their former boss.

    Apparently, the bad blood involves one side of the family accusing another of stealing their shares in the company handed down by its late founder. Whatever the reason, the family’s failure to establish détente for the good of the company, its employees and loyal shoppers has the potential to sink the entire enterprise. Longevity is an achievement by itself; love and loyalty are icing on the cake. In short, the new regime at Market Basket seems poised to ashcan something that most entrepreneurs would give their right arms to have.

    The impetus behind what Marsden bemoans as a “tragic” change at the family-run business is simple, he told Goldschmidt: “Greed has taken over the company.” Marsden, who started at Market Basket as a 14-year-old bagger under Arthur T.’s father, T.A. Demoulas, now suspects that the tight-knit, extended-family structure of the company — which he believes was a crucial element in its success — is bound to change under the new leaders. In turn, Marsden told PG, he expects a dramatic culture shift to a more impersonal, Wall Street-style company that will place more emphasis on shareholder returns, short-term growth and liquidity than on the historic pillars of the company’s success: excellent customer service and satisfied, highly motivated associates.

    Further, Sue Dufresne — Arthur T.’s longtime assistant, who resigned upon his ouster — told Goldschmidt she believes the current board “rejected and disrespected” the company’s past successes, adding that the new leadership’s actions couldn’t be explained or justified from a purely business point of view: “There’s a lot of emotion in it.”

    Read more of Goldschmidt’s crack reporting on the Market Basket saga, along with the latest developments, at Progressivegrocer.com.

    By Jim Dudlicek, EnsembleIQ
    • About Jim Dudlicek As editor-in-chief of Progressive Grocer, Jim Dudlicek oversees daily operations of the magazine, spearheads its signature features, produces PG’s monthly Trend Alert newsletter on center store issues, moderates its regular webcast series, and writes and comments about a wide range of grocery issues. A food industry journalist since 2002, Jim came to PG in June 2010 after covering the dairy industry for 7½ years, during which time he served as chief editor of Dairy Field and Dairy Foods magazines. A graduate of Marquette University, Jim is fascinated by how truly progressive grocers inspire consumers to enjoy food, transforming the industry from mere merchants into educators that can take the most basic of all necessities and turn it into something profound and life-enhancing.

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