For most of us, making that weekly run to the grocery store is uneventful. We choose fresh produce, pick up some milk, go aisle by aisle never really thinking the path each item has taken to get here, or what happens behind the scenes to keep the system running.
For shoppers in Massachusetts, Maine and New Hampshire who frequent Market Basket stores, however, the curtain has indeed been drawn back, revealing an increasingly ugly – and incredibly costly – family drama. One of the oldest family-owned businesses in the country, generating an estimated $4.6 billion annually, Market Basket has become ripe with controversy and the fall out is having an incredible ripple effect.
The Backstory
Owned by the Demoulas family, the 71-store chain of Market Basket grocery stores began one hundred years ago as a single shop in Lowell, Massachusetts. After its founder, Aurthur Demoulas, retired in 1954 and sold the business to two of his sons, Telemachus and George, the company expanded quickly. When George died in 1971, Telemachus shocked George’s heirs by gradually taking control of his nieces’ and nephews’ shares in the company. Thus began a family feud which lead to lawsuits being filed in the 1990’s and a never-ending struggle for George’s heirs to claim the fifty percent ownership of the company they feel is rightly theirs.
For the last thirty years, one of the founder’s grandson’s, Arthur T. Demoulas – of the Telemachus side of the feud – has run the business. Employees of the company see Arthur T. as fair and company-focused, encouraging a close-knit culture and support for workers in every part of the business.
The Spark
In 2013, one relative who had previously fed the stand-off by supporting Arthur T. changed her stance, shifting her support behind Arthur S. – George’s heir and arch rival of his cousin, Arthur T. (Getting all of this?) The move necessitated a vote by the company’s board of directors, who chose to remove Arthur T., putting Arthur S. and the heirs of George Demoulas in full control of the company.
The Fall Out
The ousting of Arthur T. set off a chain reaction unlike any other. After three decades leading the company, he had developed a loyalty among his employees, thousands of whom have turned up at rallies in support of their former boss. “Bring Back Arthur T.” social media campaigns have been launched, and media coverage of the uproar has been near constant.
Several employees have been fired for their actions in support of Arthur T., including those who have worked thirty or more years with the company. The refusal of some employees who are still at work to do their jobs has lead to a near shutdown of operations, resulting in undelivered product and bare shelves in many store locations. Shoppers, either out of loyalty or frustration, have taken their business to competing stores.
The Clean Up
It remains to be seen how the drama will play out. Arthur T. currently has a bid on the table to buy the company outright from his cousin, and the board of directors is giving it consideration. Other potential suitors have apparently stepped up as well, giving the board more to consider.
Meanwhile, stores are losing millions of dollars in lost sales, while rally organizers continue to encourage protestors to stay the course. The company’s new chief executives are offering to welcome back associates who are refusing to work, while the board is striking a more stern tone in statements which call the employee actions negative, accusing them of contradicting culture by not putting the needs of Market Basket customers first.
The next few weeks should be interesting, that’s for sure. From a PR perspective, all involved have some serious damage control ahead of them, regardless of the outcome. Who is the good guy here? Who will prevail? Are the employees showing loyalty or hurting their own customers?
We’ll be watching closely along with everyone else…stay tuned. In the meantime, check out our post on why it’s important to create a PR strategy so you can hopefully steer clear of a messy situation, or at least be better prepared to stay in-control when a situation arises.
We’re here to help you. The experts here at Kovak-Likly can work with you to build a plan to help you avoid or mitigate potential damage that can come to your brand. To get started, give us a call at 203.762.8833 or visit www.klcpr.com.
– BML
