The supermarket should be free to do business or refuse to do business with whomever they choose, however the child did not pick his name and likely has no idea what all the fuss is about. Yeah, the parents need a good solid slappin'.
Exactly. When I worked for Kroger, we had a similar situation come up... Kroger bakery manager, with the backing of the store manager, explained to the customers that she did NOT feel comfortable in decorating the cake with what the customers wanted to be put on the cake ("It's your birthday, BITCH!" was what they wanted). The customers (who were teenagers, btw) were more than happy to do it themselves, though, and they were given the icing to put it on the cake themselves.
Yes, the parents need a good beating. I feel so sorry for that child and what will likely happen when he's in school.

Hopefully, when he's of age, he'll divorce his parents and change his name.