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August 02. 2014 6:51PM

Mike Cote's Business Editor's Notebook: Market Basket's zombie apocalypse


 


 


 


 

In the PR battle for the hearts and minds of Market Basket shoppers, Arthur S. Demoulas has been cast by some workers and customers as the evil Arthur, representing the dark side of greed, while ousted CEO Arthur T. Demoulas has been touted as the kind, caring boss, someone who looks after his employees and pays them well.

Arthur S. and the company's corporate board get lampooned in "Dear Market Basket," a hip-hop video posted to YouTube by the SuperSecretProject that has attracted nearly 42,000 hits. Arthur T., of course, gets the hero billing.

An anonymous caller left a lengthy message on my voice mail a few days ago alleging sins of the Arthur T. faction against the Arthur S. side of the family, alluding to the legal battle in which the Arthur S. side accused Arthur T.'s father, Telemachus, of transferring to himself almost all of the shares belonging to his late brother, George, the father of Arthur S. Perhaps the wrong Arthur is being vilified, the caller opined.

A court ruled in favor of George's family in 1996 and gave them 50.5 percent ownership, as Bloomberg News noted last week, so it's hard to shed a tear for Arthur S. But it underscores the root of the blood feud that led to his cousin's firing.

Both sides of the family have shared the riches. The company has paid out more than $1.1 billion in special dividends to shareholders since 2001, according to a 2013 legal document cited by Bloomberg News.

Arthur T. is worth $675 million through his 19 percent stake and accumulated dividends, according to the Bloomberg Billionaires Index. Arthur S. is worth about $575 million.

Neither one of these guys has to worry about where to find the cheapest groceries in town.

So far, there are no real winners in this saga, just lots of losers, including the workers whose livelihoods remain in jeopardy and the customers whose loyalty means staying away from the very stores that inspired it. And, sadly, the 12-year-old girl who was seriously injured on Thursday when she was struck by a car while attending a protest at the Market Basket in Seabrook.

At the Market Basket in Manchester one recent day, employees far outnumbered shoppers. But while workers protesting nearby on Elm Street called for continuing a boycott, workers treated the few shoppers standing in line at registers with the same courtesy you would expect if it were business as usual. And while customers might have been ignoring the boycott, they voiced their support.

The workers were probably happy to have a little bit of company. Alluding to the quiet and the near-empty aisles, one deli worker dubbed it the "zombie apocalypse."

Dollar for dollar

The Market Basket standoff has scattered its shoppers to Hannaford, Shaw's, Stop & Shop and other grocers in Market Basket's New England footprint. The low prices championed by Arthur T. also keep Market Basket competitive with stores frequented by low-income shoppers, like Wal-Mart, which by far is the nation's largest grocery retailer. According to Bloomberg, Wal-Mart derives 60 percent of its revenue from grocery sales.

The economic fallout of the last several years has led to an increase in the number of people who have fewer dollars to spend and a rush to serve them, thus the dollar-store battle that came to a head last week when Dollar Tree agreed to buy rival Family Dollar for about $85 billion.

Both retailers have stores in New Hampshire. You can find Dollar Trees in strip centers, such as one on South Willow Street in Manchester. You can find Family Dollar stores in neighborhoods more likely to have a high number of pedestrians, such as the company's Second Street store on the city's West Side.

At Dollar Tree, you can buy odds and ends for a dollar; at Family Dollar, you can buy discounted items, including some groceries, in smaller batches than you might find at a bigger retailer, an attractive alternative for shoppers who can't afford to buy the large economy size, though the smaller size often means larger unit prices.

The battle over Market Basket puts at risk the low prices it has brought to urban areas such as its store on Elm Street, a world away from the sedate land of suburban grocery stores.

The number of working Americans living in poverty increased by nearly 40 percent during the recession, the Wall Street Journal reported recently, citing U.S. Bureau of Labor statistics.

The eventual end of the feud between Arthur T. and Arthur S. won't mean much if Market Basket fails to revive its low-price edge.

Mike Cote is business editor at the New Hampshire Union Leader. Contact him at 668-4321 ext. 324 or mcote@unionleader.com.



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