Market Basket: An American Success Story Turns Into A Family Feud
I don’t think anyone could have guessed the chain of events that have occurred since June 23 when Arthur T. Demoulas was ousted as CEO of Market Basket. It is unfortunately an American success story gone very wrong and has moved from a family feud to a national issue affecting the more than 25,000 employees and community members.
To fully understand the feud, it is important to know the history of the Demoulas family. Market Basket is one of the nation’s oldest supermarkets dating all the way back to 1916 when two Greek immigrants, Athanasios and Efrosini, opened a little market in Lowell that sold fresh lamb. In 1954 their sons, George and Mike, bought the company from their parents, began running it together, and quickly began growing the business. Unfortunately, in 1971 George had a fatal heart attack and Mike took over the company with his son Arthur T and Mike’s son Arthur S. In the early 1990s Arthur S’s side of the family sued Mike and Arthur T claiming that they were secretly and illegally stealing shares in order to have more influence in the company. The courts sided with Arthur S and he was given 51% of the shares. While they may have won the case, Arthur T was made CEO. During his time as CEO, he and his father were known for giving millions of dollars to churches, charities, hospitals and nonprofits. This made Arthur T loved and he was known for making employees feel like they were assets instead of expenses. Arthur S continuously argued that Arthur T was irresponsible when it came to money and finally on June 23, 2013, the board members met for a vote and Arthur T and two other top executives were voted out of leadership positions. It is this vote that has not only begun rallies where over 5,000 people attended, but also could be the reason for Market Baskets demise.
Outside of the family feud, it is important to note some of the key themes from this unfortunate situation. The first is that while a board can run a company, the employees and community can shut it down. This is something that the board doesn’t fully seem to understand. At the beginning of the recent feud, the company threatened to fire employees that weren’t working or that were protesting, then they gave them a chance to go back to work with no penalty, and then they (unsuccessfully) held a job fair to replace the protesting employees. It seems as though their mind set was that employees are replaceable and if they have to, other people can be hired. The problem with this is that it has grown larger than just the employees protesting, it has become a community event and many community members are boycotting the store leaving it empty. One store manager reported that store volume has dropped 90 percent and it is estimated that over 10,000 people attended the fourth rally. Luckily for other supermarkets and grocery stores in the area, customers have begun seeking other places to shop.
The next theme to note is the importance of company culture. This is something Arthur T not only knew, but lived by. The new CEO’s James Gooch and Felicia Thornton don’t seem to understand what the culture is, and at this point it wouldn’t matter if they did. Recently, Arthur T offered to buy the 51% of the company that Arthur S owned, but the company responded that they were looking at several options. News came out that other supermarkets may be offering to buy Market Basket as well. The Save Market Basket Facebook page responded by stating:
“To be perfectly clear once again, associates and customers are NOT coming back to Market Basket unless ATD is back in full control with full authority. We are sick and tired of these planted stories about yet another bidder etc…have you not been listening. Fotene, Dianna and Rafaela YOU can end this nonsense once and for all. To any potential buyers other than ATD, you better look at the complete wreck of a business you are buying and you had also better know that the ONLY CEO that can get this fixed and get associates and customers back is ATD. Delhaize (hannaford), Cerberus (shaws) and Ahold (stop & shop) you have been put on notice. If you buy this shell of a once great business then that is what you will end up with, a shell of a once great business. There is only one option for the shareholders sell to ATD and stop this nonsense of saying there are other bidders.”
This feud has become extremely personal for many people and it seems as though community members and employees won’t stop until either Arthur T is back in control, or the company is shut down. It is unknown when or if the board will sell the shares, or if Arthur T will be reinstated, but for the company’s sake, a decision should be reached soon. While it is unfortunate to see such a successful supermarket and family be torn apart like this, it is a perfect example of how much control the customers actually have.