Supermarket Suppliers Buffeted By Fuel Declines

We've come to assume that in this recession, retailers fare poorly but supermarkets survive quite well. People need to eat, after all. If supermarkets are still doing ok, however, their suppliers are getting squeezed on all sides.

From supermarket chain The Great Atlantic & Pacific Tea Company's FQ308 conference call (GAP):

On the supply side of things our relationship with our distribution provider and partner C&S continues to improve as we collectively seek cost savings and efficiencies while learning to manage our individual businesses under the new contract.

We are seeing is that as fuel prices come down and as some of the commodity prices come down the vendors are quite reticent to put that into cost of goods and are now throwing it into funding. So there is an opportunity for us to take advantage of that in the funding and I have to tell you also we are being very, very forceful in terms of those vendors that did give us the price increases when fuel went up and commodities went up that they have got to be the first to give us the price decreases when fuel comes down and commodities come down.

Comments

[bosun.j:]

Grocery warehouses were benefiting from there being many more trucks than loads for them. $4.75 fuel put many small carriers and owner operators out of business for good. Now there are fewer trucks for the same number of loads and freight rates will reflect that.

Jan 13 01:35 AM

[xeitnier:]

true

Jun 15 11:09 PM