The ongoing crisis at Market Basket, now in its third week since June 23, 2014, is unprecedented in the history of the modern U.S. supermarket industry. The crisis at the supermarket chain makes national headlines daily, and because of its difficulties, it is estimated that Market Basket is losing about a million dollars per day. You got that right – about a million dollars per day. The chain is among the largest privately-held supermarket companies, with 71 stores and more than 25,000 employees (yes, that “thousands.”) The company is widely reported to be worth somewhere between $3 and $3.5 billion dollars (yes, that’s with a “b”). For scale, Market Basket is worth more than many professional ball clubs in U.S. baseball. (Ever see the film “Moneyball”?)
Here’s a quick timeline of how events in the business crisis have played out:
The trouble started on June 23 when Arthur T. Demoulas was removed from his position as president of Market Basket by the board of directors that was controlled by his cousin, Arthur S. Demoulas, who along with his faction owns 50.5% of the shares in the company, as opposed to the 49.5% Arthur T. owns.
By July 18, some very senior executives at the Market Basket headquarters in Tewksbury, Mass., demanded that Arthur T. Demoulas (“Artie T.,” as he has become known, distinguished from his rival cousin, known as “Artie S.”) be reinstated. In an amazing display of loyalty, it is estimated that more than 2,000 employees held a rally supporting Arthur T. That same day, those eight employees who fostered the protest were fired.
Another rally by employees was held on July 22. At that time, Arthur T. demanded that the fired workers be reinstated to their positions. Arthur T. also said at that time that he would attempt to buy the 50.5% of the business that is controlled by Arthur S.
By July 30, more than 600 employees were at risk of losing their jobs if they didn’t return to work. In response, the Board of Directors then bought full-page ads in Massachusetts and New Hampshire newspapers announcing job fairs to replace protesting workers. They weren’t bluffing: On August 4, Market Basket held those job fairs in order to replace the lost workers. On August 6, the heat ratcheted up, as part-time workers had their hours cut.
As all of this transpires, it is said that the shelves – and the stores – are empty. Millions of dollars in revenue are reported to be lost every day. More importantly, as these losses mount, the company suffers such damage that it becomes less and less attractive to customers, potential buyers, even lenders.
All of this, makes me wonder. What is Stop&Shop doing to capitalize on this? What about Shaw’s? What about the Big Y? I don’t see them advertising or marketing themselves in any way in order to lure shoppers who can no longer make their purchases at Market Basket. Why the silence? Is the competition afraid that they will be seen as taking an unfair advantage of the Market Basket crisis? The competition has been curiously absent in its reactions.
One of the major points that I have seen made about Market Basket during this crisis, is that it’s prices are lower than low. A story filed by Anthony Silva, Business Editor for WBZ-AM-Radio compared the prices of the exact same items at Shaw’s, Stop&Shop, and Market Basket. What Silva found was that the prices at Market Basket were indeed the lowest; he stated in his radio broadcast something to the effect that if a family shopped for a year at Market Basket instead of the competition they could save about $2,000.
Wow. That’s a lot.
So, as a Boston Marketing consultant, it makes me ponder – What the heck is the competition going to do if and when Market Basket gets back on its feet? In thinking about this, I would say that the competition should honor Market Basket’s coupons, in order to keep the Market Basket shoppers shopping with them. Are you listening, Stop&Shop? What about you, Big Y? As for Shaw’s – every time I go there after I’m done at the gym, because it’s located in the same strip mall – there’s never anyone in there. I NEVER do my weekly shopping at Shaw’s because the prices are simply too expensive. While some of their prices have come down in recent months (unrelated to the Market Basket debacle) Shaw’s remains no bargain, and in my professional opinion as a retail marketing consultant, I don’t think they are going to be around too much longer. The shelves are bright and full of inventory – but I find that shoppers there are few.
Market Basket – after you get back on solid ground, you need to make much of the fact that yours are the best prices in town. As a Boston retail marketing consultant, that’s my advice.