The Margin Squeeze in Grocery Retailing

I notice today that Supervalue (owner of Albertson's and Shaw's) has recorded a loss for their Q3 ending Dec. 4.

This quote by Mr. Herkert (CEO of the company), about food prices is even more frightening:

"'With all of our major vendors announcing their intentions to pass along rising costs, we expect store prices to rise throughout the calendar year,' anywhere from 3% to 14%, he said."

Margins for Q3 were 21.5% as compared to 22.4% a year earlier. This is a huge change!

As alarming, Q3 revenue decreased 5.9%

With food retailers experiencing a great deal of profit pressure, it is almost certain that or 2011 there will be higher than average inflation in grocery prices.

Previously I made the following post to my blog:

Weak Outlook for the Food Industry

There is not much prospect for a turnaround soon!