Market Basket management paying for missteps in standoff
The stores are running out of groceries, loyal customers are promising to shop the competition, and a group of longtime employees who were summarily fired by management are being made into martyrs by thousands of protesters.
Could it get any worse for Market Basket?
What began as a family feud spread into an insurrection among employees and has since quickly escalated from a public relations nightmare into an outright business crisis for the Demoulas Super Markets Inc. chain.
Specialists in crisis management and business practices say they are astonished by how the executives who control the grocery empire have managed the situation.
"It's just unbelievable to me to see this happening," said Richard Nicolazzo, managing partner of a Boston communications firm, Nicolazzo & Associates. "Management, in my view, has been completely flat-footed in its response."
Nicolazzo said Market Basket executives were too heavy-handed in dealing with employees upset about the firing of their longtime boss, Arthur T. Demoulas, by swiftly dismissing workers who organized the protests and appearing insensitive to their concerns.
Now those steps are coming back to haunt the chain's bosses, Nicolazzo said: More than 13,000 people have signed an online petition calling for a boycott of the supermarket chain, thousands more have shown their support on a Facebook page created by the protesters, and pictures of empty shelves at Market Basket stores around the region are ricocheting around social media sites.
"How long can they continue to have Market Basket shelves that are empty?" he said. "How long are those customers going to stay loyal? How long can you continue this standoff?
Demoulas executives did not respond to requests for comment on how they have handled the crisis.
One major issue identified by Nicolazzo and others is that the current management has not been visible to the public, whereas the rank-and-file employees are well known to shoppers of their stores and have been willing to put their faces and names to the protest.
Neither Arthur S. Demoulas, who gained control of the company's board and ousted his cousin in June, nor the executives Demoulas picked to replace him, have appeared in public. Moreover, specialists said the few public statements from the company may have backfired with customers.
For example, the two new cochief executives, Felicia Thornton and Jim Gooch, apologized to customers for the controversy in a full-page advertisement that ran in Saturday's Globe, but also criticized the protesting employees, who for many customers are the only faces of the company they know.
Gary Chaison, a professor of industrial relations at Clark University in Worcester, said management then made the situation even worse by firing some of those employees.
"Discharging workers who are supporting this action who have long seniority and clean work records, it's going to look terrible for them," Chaison said. "They're creating their own martyrs."
Indeed, among those who attended the large rally organized by employees Monday morning in Tewskbury was Market Basket customer Paula Komola. The 50-year-old Haverhill woman approached Dean Joyce, a warehouse supervisor who was among the eight fired by the company over the weekend.
"You don't know me. I'm a customer. I'm here because of you," Komola said to Joyce. "You are not alone."
Stephen A. Greyser, a professor at Harvard Business School, said that so long as Market Basket management alienates their employees, they risk alienating customers, too.
"The erosion of customer loyalty can happen pretty quickly," Greyser said. "I would suspect that most customers don't believe the new CEOs know a lot about what actually happens in stores."
John Carroll, assistant professor of mass communication at Boston University, said the Demoulas executives have had only "manufactured communication with the public" and urgently need to have Arthur S. Demoulas or other executives speak in public to "put a human face on management."
"What they need is someone the public can latch on to as authentic and credible, and right now, they don't have any of that going for them," Carroll said.
There are at least two schools of thought as to what Market Basket could do next.
Daniel Korschun, a marketing professor at Drexel University who attended the rally to gather material for a case study, said the directors should even consider reinstating Arthur T. Demoulas.
Short of that, the executives should make a major effort to run the company exactly as Arthur T. would.
"Their very clear objective is going to be to prove to these various stakeholders that they're not planning on shaking things up. And that will take a lot of time," said Korschun. "We're talking about months, not days, in a PR campaign."
Or, management could just hit reset and pretend everything is back to normal, said Chaison, the Clark University business professor.
"Reinstate the discharged workers. That's what I would do. Then all of a sudden you may seem like the good guy," he said. "It makes it appear as though you've made amends, when you actually haven't."