Despite weeks of speculation about various private equity consortiums that were circling Albertson’s grocery chain, the board last night rejected a $9.6 billion offer, reports the New York Times.

The paper reports that the company will now sell off it’s less profitable operations and try to recapitalize. The trouble is that it will still face the stiff competition from Costco and Wal-Mart and none of its other competitors such as Krogers and Safeway have figured out a formula to fight off the big box competition.

In fact, specialty stores like Whole Foods seem to have creamed off the fancy foods that supermarkets have been trying to get into their stores (bakery, deli, fish and organics) for the last 10 or 15 years.

If the sell-off happens, we’ll find out which stores weren’t making enough.