Market Basket: A Regional Chain with National Implications

Market Basket: A Regional Chain with National Implications

        In the summer of 2014, Market Basket, a regional grocery store chain, found itself in the midst of a dramatic corporate battle that subsequently made its way down to the local neighborhoods and spread its scope to affect several economic factors, both regionally and nationally.  What began as the seemingly end to a decades-long family feud, soon revealed the breadth of its implications.  During the nine weeks that the fight for  leadership of the company waged on, its impact shifted the company's organizational structure, caused significant disruption in its supply chain processes, and altered local consumer behavior.  

Background

        On June 23, 2014, during a meeting of the board of directors, Arthur T. Demoulas (Artie T.), president/ CEO of Demoulas Super Markets, Inc., was fired along with the company's vice president and director of operations by the urging of Artie T's own cousin, Arthur S. Demoulas.  This was seemingly the end of a family feud between the two cousins that dated back over forty years.

        The story of the Market Basket chain starts off like a classic American tale and: nearly a century ago, a Greek immigrant couple open and operate a local grocery store in a small northeastern city.  During the 1950's, two of the couple's sons (Mike and George) buy the business from their parents and immediately work on expanding the company to fifteen more stores in the region.  The expansion proved quite successful for the two brothers.  With an equal partnership in the businesses, they saw a steady increase in profit.  However, this American tale turns into a Greek tragedy in the early 1970's when one of the brothers, George (Arthur S's father), dies of a heart attack.  The other brother, Mike (Artie T's father), vowed to support his deceased brother's family, but it became clear that his business maneuvers were purely self-serving, as his family's control of the company grew exponentially and that of George's side diminished.  In the mid-1990's George's side eventually sued Mike's side for fraud and won – a controlling 50.5% of the company, as well as hundreds of millions in lost dividends.

        The feud continued on to the next generation and saw an unrelenting battle between Arthur S. and Artie T. – both in the boardroom and courtroom.  The plot thickened, as a lone family member from Arthur S's side, would repeatedly vote in favor with Artie T.  Therefore, though Artie T. had the minority share of the company, he possessed the majority vote in corporate affairs.  That all changed this past year, as Arthur S. was able to convince that lone family member to switch sides.  Thus, began Arthur S's campaign to rid the company of Artie T.  A campaign that culminated with Artie T's firing and the appointment of two "outsider" co-CEO's, Felicia Thornton and James Gooch.