May 26, 2018
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‘Corporate disobedience’: The Market Basket saga continues

By Jena McGregor, The Washington Post

On June 24, employees of the New England grocery chain Market Basket first began organizing rallies and efforts to reinstate their fired president.

More than a month later, there appears to be little sign the unusual saga is coming to an end. Many shelves remain empty, the ousted leader has made a bid for the company, and employees are prompting customers to spend their dollars elsewhere.

Over the past few weeks, workers at the 71-store chain, which has locations in Massachusetts, New Hampshire and Maine, have held rallies with thousands of people. They’ve walked off the job, started protest Facebook pages and asked customers to boycott their own stores. They’ve halted deliveries that have resulted in barren shelves and drops in customer traffic.

What they want: Nothing less than the reinstatement of their former president, Arthur T. Demoulas. The case — which involves senior managers protesting alongside rank-and-file workers, both seeking to get back the job for the guy in charge — has very few comparisons, say management scholars. “The response is very unusual,” wrote Wharton professor Michael Useem in an email. The only parallel he says comes to mind (and it’s not a strict one, he notes) was the forced resignation and reinstatement of Teresa Sullivan as president of the University of Virginia in 2012.

Why was Demoulas so popular? His business philosophy was to pay workers well, fund their retirement accounts, and keep prices low, an approach the board has said it does not intend to change, despite the skepticism of workers. He has also been praised for his integrity and his personal touch.

In the days since, the unusual case has had even more twists and turns. The ousted president — widely known as “Arthur T.” because his cousin and rival, Arthur S. Demoulas, now controls the board that ousted him in June — made a bid last Wednesday to buy the 50.5 percent of shares owned by his relatives. For decades, Market Basket has been embroiled in a family feud between two branches of the family.

Then, on Friday, employees staged another big protest. The same day, two statements, one from the board and another from the company, made an attempt to get employees back to work. In the first, the board said “the negative behavior of certain current and former associates is at variance with the Company’s culture of putting the needs of Market Basket customers first.” It called for “normal business operations to resume immediately.”

Later that evening, a second statement from the company sounded a friendlier tone. “The past month has been trying,” it read. “We appreciate the strain this change of leadership has placed on our associates.” It went on to promise that employees who returned would not face discipline or penalty and that “there will be no change to Market Basket’s unmatched compensation and benefits.” (A spokesman for the company said that “leadership is entirely focused on returning the company back to normal operations. They continue to encourage employees to come back to work.”)

Meanwhile, customers have been getting more involved. Shoppers have attended rallies. They’ve been commenting on the workers’ Facebook protest page in droves, as well as starting their own. And they even organized their own “rolling” rallies on Saturday, according to Tom Trainor, a 41-year Market Basket veteran who was a district manager of 37 stores before he was fired July 20. “The customers have taken us over,” he says. “They’ve taken this on as their cause.”

Daniel Korschun, a marketing professor and fellow at Drexel University’s Center for Corporate Reputation who is writing a case study about Market Basket, says he too has watched customers’ support evolve. When he visited a Market Basket store Sunday, he saw dozens of receipts from purchases made at competitors’ stores that shoppers had taped to the door. “They had notes saying ‘we support Arthur T.,’” he says. “There was somewhat of a cult following even before the protests began. Still, what’s remarkable is how much customers have gotten involved.”

He believes Market Basket’s employees have been explicitly trying to engage customers in order to sustain the pressure on management. “I think [employees] sense that if it becomes so severe that the stores become completely empty, the new co-CEOs will try to find a way to get stock on the shelves,” Korschun says. “If and when that happens, it really becomes up to customers whether they shop there or not.”

While it’s unclear how the saga will end — the board has reaffirmed its new co-CEOs while also saying it is seriously considering the bid from Arthur T., as it is obligated to do — one thing that is certain is how unusual the situation really is.

“I’ve been calling it corporate disobedience,” says Korschun. “There’s no other word in the lexicon for it.”

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