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Tuesday, July 22, 2014

Market Basket war over culture, brand

Telegraph Editorial

The Market Basket supermarket chain appears to have something in common with the National Football League.

There’s no evidence yet that a saturation point exists for either. ...

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The Market Basket supermarket chain appears to have something in common with the National Football League.

There’s no evidence yet that a saturation point exists for either.

While the NFL considers whether to establish a team in London on a permanent basis, Market Basket is putting on a show much closer to home.

There are several remarkable things about the fight playing out over the 71 Market Basket stores throughout New Hampshire, Massachusetts and Maine.

The first is the loyalty of the employees. One can’t help but be struck by how much they care about the company, their co-workers
and the chain’s shoppers.

About 2,000 employees and others rallied at company headquarters in Tewksbury, Mass., on Friday and again Monday to call for the reinstatement of deposed CEO Arthur T. Demoulas, who was ousted by the company board of directors in favor of his cousin, Arthur S.

The loyalty running from employees to Arthur T. is especially striking. Workers at the Market Basket on Lowell Road in Hudson – one of three local Market Baskets in a 10-mile radius – put up photos of the ousted CEO above the words “We Believe.”

What they believe is that Arthur T. is the man responsible for fostering a unique business model that serves shoppers, employees and stockholders alike, although at a smaller profit margin than some in the Demoulas family might prefer.

The rift within the company is not the kind of thing where common ground can be readily found, unless there is a cousin to be named later who might be amenable to all sides and a deal can be brokered around that person. Nobody should wait in the walk-in freezer for that to happen, though.

Some politicians have called for a store boycott, but that may not be necessary. The company announced on Sunday that it had fired eight middle managers as a result of an interruption in deliveries that left shelves in some stores empty.

If the shelves stay that way to any appreciable degree, that will result in a forced boycott of a different sort, by driving shoppers to Market Basket competitors who offer most of the same products but have differences in price, service and environment.

It is aggressive pricing for which Market Basket is best known and that is what has kept the company’s customers loyal and sunk would-be competitors. That pricing is also likely to be critical in determining whether shoppers eventually return to Market Basket if empty shelves force them elsewhere.

It seems doubtful that Arthur T’s cult of personalty extends to any great degree to most Market Basket shoppers any more than the success of Apple depended much on the cult of Steve Jobs beyond a certain point. The vision of both men shaped their companies, to be sure, but they grew them into something that ultimately became bigger than any one person.

Shoppers have demonstrated that the market for Market Basket is insatiable now, but that is not necessarily always going to be the case. The same illusion of permanence once also surrounded such retailing giants as the A&P and IGA grocery chains and department outlets like Woolworth’s, Sears & Roebuck, Lechmere, Jordan Marsh and Rich’s.

Such, we suppose, is the temporary nature of permanence.

Market Basket employees see themselves as the guardians of a standard that sets the Market Basket brand apart from those of stores that have long since fallen by the wayside. They fear that change at the top will fundamentally change the culture of Market Basket (and perhaps eliminate the popular profit-sharing plan), making it indistinguishable from any other grocery chain and damaging the brand in the long run.

If that happened, it wouldn’t be the first time.