Albertsons shares growth plans for Own Brands
Meal solutions, family and value packs, and using e-commerce to build awareness of private brands are three areas where the Albertsons’ Own Brands team is looking to drive growth in the year ahead. The retailer highlighted new numbers and details around its private brand strategy in a special presentation for the investor community.
For its second "Albertsons Insights" presentation for investors, Albertsons focused on the Own Brands team including talks by Albertsons’ chief merchandising officer Geoff White and Chad Coester, the company's senior vice prsident of Own Brands.
The presentation echoed a lot of what Store Brands covered in its Retailer of the Year profile, which was highlighted during the call, such as how the Own Brands team operates like a CPG brand, building out nine powerhouse brands that can innovate and bring new products to the shelf in as little as 20 weeks.
Own Brands gain share
Sharing some store brands results: the presentation highlighted Own Brands as a $14 billion business with more than 12,000 SKUs across 500-plus categories. And in just about half of all of the categories it serves, the private brands rank as a top-three manufacturer.
Additional highlights from the presentation:
- In produce and packaged salads, Albertsons Own Brands have close to a 50% market share; 60% In dairy and and cheese, and 23% in the emerging coffee pods category;
- One hundred percent of the most loyal Albertsons customers have own brands in their basket and over the last 10 weeks they are spending more than 15% a trip than a household not considered store brands loyal; and
- Waterfront Bistro and the store brand seafood category is seeing a 50% growth rate.
Among the bright spots that Coester touched on was the strength of Albertsons' Signature Select brand, which represents just shy of 50% of its total portfolio. He noted that it has transitioned over the years to become more than just an entry-level price point product across categories, growing into a brand offering high-quality products with full-scale package redesigns that enable them to stand out in their respective categories.
Pandemic drives growth
As consumers are looking to save money during a tough economy and stock up during a tough pandemic, the Own Brands team has seen significant growth in value packs. The company’s Value Corner brand is doing well during the pandemic.
During the presentation, Albertsons said they are looking to build out private brands via e-commerce, saying private brand sales have doubled online, year to date, thanks largely to its Drive Up and G curbside offering and its delivery programs. The curbside pick-up program currently is available in 1,400 locations, but will be available at 1,800 by end of 2021.
Eyeing the future
The Albertsons Own Brands team is aiming to hit 30% total market penetration. The company showed a steady rise in penetration with 21.9% market penetration in 2016, 23% in 2017, 25.1% in 2018, and 25.4% in 2019. White said that the penetration number dipped slightly in 2020 but it’s more a result of product supply issues and he expects with regular supply patterns kicking back in, growth rates will continue to rise.
The company is also looking to help develop more private brand meal solutions, such as its newly released Open Nature skillet meals. With more consumers cooking at home due to the pandemic, they are also showing cooking fatigue, so there’s a need to provide quick-and-easy meals for families to cook.
Albertsons also touted its sustainability focus, continuing to shoot for all private brand packaging to be 100% recyclable, compostable or reusable by 2025. The company’s O Organics coffee is now 100% fair trade certified, and its seafood is stamped and confirmed sustainably sourced.
Additionally, Open Nature and O Organics will continue to grow as there’s a lot of white space executives said is yet to be covered. The company just launched its first non-\food O Organics product in laundry detergent and Open Nature has branched into oral care, paper products and more. Plant-based foods will be a key growth segment with new products coming in 2021, too.