Own Brands Growth A Priority For Albertsons
With the proposed Kroger merger in the rearview mirror, Albertsons is moving forward with investments in several areas, including increasing the penetration rate of its Own Brands assortment.
During the company’s third-quarter investor conference call, its first since the merger was scuttled by a federal court judge in December, Albertsons CEO Vivek Sankaran said the grocer is focused on driving better value for its customers while strategically investing in price in certain categories and markets.
“To deliver this, we will source products that customers trust and need at a better value to drive profitable unit growth and increase share of wallet from existing customers,” he said. “In Own Brands, we will also offer products at an attractive entry price point so that customers always have an accessible alternative and more prominently feature existing Own Brands offerings.”
While Sankaran did not offer specifics on Albertsons plans for growth with its Own Brands assortment, the grocer is recent months has continued to expand its private label product selection.
Just after Labor Day and in time for Halloween, Albertsons launched 150 items for the October holiday under its Overjoyed brand. The line included a curated selection of treats including cupcakes, cookies, chocolatey trail mixes, cheesecakes, and sprinkles along with candles and liners.
Also in September, Albertsons expanded its private label wine selection with the launch of Bee Lightly. The initial assortment included the 2022 Bee Lightly Chardonnay and the 2023 Bee Lightly Rosé. A unique aspect of the assortment is the unique flat bottle design made from 100% recycled polyethylene terephthalate (PET).
While expressing disappointment in the termination of the merger with Kroger, Sankaran said the company continued expanding its business and driving its Customers for Life strategy.
This includes investments in e-commerce, which have driven sales penetration to more than 7% of grocery revenue, with Albertsons' top-performing market above 9%. This growth has been driven by the development of new capabilities in the grocer’s mobile app along with improvements in quality, speed, and convenience of Drive Up & Go and in-home delivery, he said.
“While we have grown this business significantly and faster than the market, it is still under-penetrated compared to industry benchmarks and is one of our biggest growth customer acquisition and customer retention opportunities,” he said. “To capture these opportunities, we are rolling out a store-based five-star certification program to ensure we are delivering a consistent and elevated level of customer service, as well as a series of targeted marketing initiatives to grow sales and penetration.”
While Albertsons takes steps internally to grow market share, Sankaran acknowledged the competitive forces the company faces.
“We have a mass retailer and a club retailer that are growing much faster than us,” he said. “And no matter what anybody thinks, they are real competitors to us. We know that to win in the marketplace, we have to compete with them and we have to get better performance to gain market share overall.”
Albertsons’ mobile app is also a key tool in the company’s efforts to further enhance customer loyalty as it serves as an entry point for digital and personalized marketing. In April of 2024, the company launched a new effort to make it easier for shoppers to earn points and redeem coupons, fuel, and grocery rewards, allowing customers to redeem points for dollars off their grocery bill.
“Since the launch, we've seen more frequent engagement, higher retention, and increased customer spend,” Sankaran said. “Going forward, we expect to continue to see increased adoption and we will leverage strategic partnerships to provide our members with even more ways to get rewarded.”
Additionally, Albertsons has continued to develop its productivity engine, designed to improve efficiencies and improve costs. Over the next three years, the company plans to deliver $1.5 billion in savings to invest in its customer value proposition and growth initiatives as well as to offset inflationary headwinds.
“To achieve this, we are leveraging our recent investments in technology and the latest innovations and business best practices to build industry-leading capabilities and reduce costs,” the Albertsons’ CEO said. “The first of these initiatives is leveraging our consolidated scale to buy goods for resale. The next is transforming our ways of working, including rebalancing our onshore and offshore activities.”
