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The Chicago Sun Times reports this morning about a market survey done by Scott Mushkin, managing director at New York-based Jefferies & Co, suggesting that Supervalu has raised its prices by six percent at its Jewel-Osco stores since it announced last spring that it was lowering the prices on thousands of items.

According to the story, “The price of a sample market basket of groceries at Jewel-Osco stores in the Chicago area totaled $163 in January, compared with $155 during the grocer's lowest-price promotions period in May 2009, the Jefferies report said. The market-basket survey measures fast-selling items that grocery stores promote, such as milk and eggs, as well as perishables such as fruits and vegetables.

“Dominick's and Wal-Mart's market-basket prices remained flat in January compared with May 2009, totaling $159 and $136, respectively, the analyst's report said.”

Jewel-Osco management has responded that any price increases were related to cost increases it does not control, such as the price of commodities, and it said that it stands by its price impact promotion.
KC's View:
See, I’m not sure how many consumers are going to get the whole “when prices go up on commodities it isn’t our fault” argument, especially when the competition seems to be able to keep its overall prices flat. They hear the defense, but they think, “shell game.”

This is the kind of stuff that retailers have to be very careful about. If you are going to compete on price and make that your calling card - which seems to be the primary strategy sounded by Supervalu CEO Craig Herkert - you’d better walk the walk....because Walmart is accomplished at walking the walk and talking the talk at the same time.

Supervalu may feel pressure to look good to the Wall Street community, which may be part of the reason that prices have gone up (and the Jefferies report notes that the company’s profits have gone up at the same time as prices). But you have to decide at some point whether you are going to look good on Main Street or look good to Wall Street. You can do both, but it takes amazing discipline and consistency.

True or not, in the Chicago area it is now being implied that Jewel-Osco has neither. Which is not the position they want to be in.