retail news in context, analysis with attitude

As the two sides of the Market Basket dispute in New England reportedly have vowed to resolve their issues by the end of the week, the Boston Globe reports that a major seafood vendor has decided to cease doing business with the retailer because of erratic payments from the company.

According to the story, Boston Sword and Tuna, which has done business with Market Basket for about a decade and supplies the company with some 50,000 pounds of salmon and other seafood each week, says that the retailer fell behind in its payments by several weeks, which forced it to send a letter threatening legal action. The seafood purveyor then got a reassuring letter from co-CEO Felicia Thornton, and then, some days later, a $40,000 check - which was, in fact, more money than it was owed, and the second time it had been overpaid after bills went unpaid.

Tim Malley, CEO of the seafood company, says that this made him question the direction of current management: "There could only be two answers to these accumulating mistakes and self-destructive strategies. One was that the CEOs were way over their heads. How many mistakes like this were being made? How would the shareholders from either side of the feuding family feel knowing that mistakes of this magnitude were being made? The only other explanation seemed to be a deliberate attempt to sabotage the future of the company."

Malley tells the Globe: “Going public with these facts has been a very difficult decision for us. We have enjoyed a business relationship with Market Basket, its former owners and buyers, which many in business never get to experience … We think the time has nearly run out for saving this great institution and all those who depend on it."

Market Basket's management said it was working to resolve payment issues, and laid the blame squarely at the feet of its recalcitrant employees: "When a distribution network set up over decades is shut down in one day it is naive to assume any company would not suffer. The longtime employees that ran Market Basket's buying and distribution system walked out on their jobs, their customers and their vendors on July 18. That is precisely the reason Market Basket's stores have had only limited perishable items in stock since. We do understand the problems that the shutdown of the distribution system has caused Market Basket's vendors who are caught in the middle of this situation. We have been diligently working with vendors to limit the damage the walkout has caused."

The Globe reports that this was not an isolated incident, and that other vendors have decided not to do business with Market Basket at the present time because of the controversy surrounding the company.
KC's View:
At this point, it almost doesn't matter who is in the right and who is in the wrong. Sure, Arthur S. Demoulas and his side of the family have longstanding grievances with their cousins, not to mention feeling that Arthur T. Demoulas has been too generous with employees and not generous enough with shareholders and ownership. And sure, the employees feel that Arthur T. Demoulas is the only one with the right vision for the company, in part because he's been remarkably successful at getting them to buy into that vision.

The only way Market Basket survives is if a deal is struck and Arthur T. Demoulas gets both financial and managerial control of the company. And I think it has to happen by Labor Day weekend, or it could be that the company will be beyond saving.