Quote:
Originally Posted by you&me
I can see some margins getting squeezed during inflationary periods, as consumers can't keep up with increasing prices, but would imagine that would apply to business with more margin to squeeze, which was kind of the point... Grocer's margins are pretty thin, so their pricing is pretty inelastic and there's not a lot for them to give, even if they were feeling altruistic, as some seemingly assume they should be.
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That probably has more to do with Canada basically having only 3 huge grocery retailers and little competition. Grocer EBIT margins in the US dropped during 2022 and were lower than pre-pandemic. Meanwhile in Canada, beyond being significantly higher than those in the US, EBIT margins have seen increases in recent years:
https://www.datawrapper.de/_/a2X0V/
For context for those numbers, the US average EBIT margin for the 15 largest grocers was 4% in 2022 whereas the big 3 in Canada are between 4.4% and 7.7%. Perhaps that's entirely due to diversification (e.g. selling higher margin non-food goods), but a lot of US grocers do the exact same thing.