Retailer of the Year 2020: Albertsons
Around the corridors of Albertsons’ corporate headquarters in Boise, Idaho, the supermarket chain’s Own Brands team is making quite a name for itself.
In fact, Albertsons’ Own Brands team, which sits in the Pleasanton, Calif.-based office, has four brands under its umbrella that have amassed $1 billion in sales each. In all, Albertsons Own Brands garnered $12.8 billion in sales in fiscal year 2019, and in a pandemic year, sales could juice that number in 2020.
In its first quarter earnings call, the company reported that its O Organics sales were up 31%, comparing the periods, and Open Nature was up 28%. The latter could be the latest brand to join that $1 billion club, taking a seat with Signature Select, Signature Cafe, O Organics and the 115-year-old brand Lucerne.
Now, Albertsons’ leadership wants to take its store brands division to another level completely. In that Q1 earnings call, Albertsons CEO Vivek Sankaran said that the company has set a goal to reach 30% market penetration with its store brands within the next few years. This is a jump from its 25.4% own brand penetration in 2019.
For its past success, as well as its future plans with store brands, Store Brands is recognizing Albertsons as its 2020 Retailer of the Year.
Albertsons’ goals with store brands are high, but there are many reasons to see the chain reaching them.
Chad Coester, senior vice president of Own Brands, said that the 30% mark is a nice position in terms of penetration of private brands but also maximizing the retailer’s national CPG partners. “We have an internal vision to truly be the number one reason why our shoppers select to shop at an Albertsons banner. That goal is aspirational but absolutely defined,” he said.
To get there, Albertsons is doing it with a mix of innovation via a constant churn of creative store brand products, marketing with an omnichannel strategy that promotes its private brands as well as a national CPG and people (the Own Brands team is about 100 deep). “It’s really our people and their passion behind the brands that make our products come to life,” Coester said. “I think that’s why we’re seeing the success we are. Absolutely, it’s the strategy and the tactics, but it starts with the people."
And, as phenomenal as the numbers and results have been last year and this year, it’s the people that are worth recognizing with a Retailer of the Year honor because the truth is that for the last few years Albertsons has been a shining example of private brand success — creating entire owned brands that go beyond the staid image of a private label offering.
Just ask its most veteran leader, Nancy Cota, who has been with Albertsons for 44 years, 21 of them in store brands. She’s not only witnessed this transformation to brand, but helped drive the evolution for 12 of the Albertsons 13 store brands.
“We are no longer private label products,” Cota said. “We are brands. And we’re proud of them, and we want our shoppers to think of them as their own brands,” Cota said. She currently operates as the company’s vice president of innovation and product management, with a focus on fresh areas on the perimeter.
To her, the beauty of Albertsons Own Brands is the excitement they bring to every store under the Albertsons umbrella. Banners include Albertsons, Safeway, Jewel Osco, Amigos, Vons, Randalls, ACME, Pavilions, Shaw’s, Star Market, Carrs, Tom Thumb, United Supermarkets, Albertsons Market, Andronico’s, Albertsons Market Street, Market Street, Haggen, United Express and Lucky.
Cota said Albertsons has the advantage to launch new products very quickly to stay on top of trends and do so without needing to spend millions of dollars on marketing. “We can be on top of what shoppers are looking for and bring that excitement."
Coester gives the team license to take risks and leaves it to the shopper to respond if a new product is something they want or not. “We rely on data and analytics to make sure our assumptions are correct,” he added. “We can go from concept to launch in-store in 20 weeks.”
Jennifer Jesser, vice president of finance and analytics, for the chain, which has stores under 20 banners in 34 states and Washington, D.C., said innovation, data and an omnichannel strategy will help push the company toward that 30% penetration goal. “We’re going to focus on category and portfolio optimization, making sure that we have the products in the right categories and making sure we’re driving category growth.”
Jesser leads an analytics team that studies the shopper and said everything Own Brands does is focused on the shopper. The team knows the shopper today is primarily making her decisions from a mobile phone or digitally, so they’ve doubled down on those tactics. Earlier this year, for example, the company ran store brand promotions through Pinterest.
“We want to talk to the shopper throughout her entire journey with us,” she said. “We want to elevate the pre-shop visibility when she’s deciding where to shop. We want to drive purchases in-store through e-commerce with that shopper, and grow her loyalty and her engagement post-shop.”
An Internal CPG Company
One of Albertsons’ greatest points of difference from how other retailers operate could be the fact that its Own Brands team receives dedicated qualitative and quantitative shopper insights support.
“When you put the customer at the center of everything that you do, and when you hear from both an analytics-syndicated household and then the qualitative, we’re speaking to shoppers in small group settings. That’s influencing everything we’re doing from go-to-market, innovation and packaging,” Coester noted.
Cota said it is a huge advantage for the team to recognize that everything starts with the shopper and that they can lean on internal teams for insights and not be dependent on external teams or suppliers.
“We really look at ourselves as truly a CPG inside of a $60 billion retailer,” Coester added.
Operationally, the team is structured with Coester, who has 25 years in at the company, at the helm since September 2019. Cota leads innovation and product management for fresh foods and Beto Galvan leads innovation and product management for the center store.
Jesser runs the finance, planning and analytics, a center of excellence within the company. Elizabeth Strydom leads the many technical and quality regulatory teams, another center of excellence.
Alice Chan oversees sales and marketing, designing the growth strategy, driving visibility of store brands in the banners, and influencing the shopper journey. Don Davidson is the point person for the strategic sourcing, using data and his relationships to find the most unique items and suppliers to delight shoppers.
In 2019, the Own Brands team launched 932 products and many more followed in 2020, including a line of 13 new ice cream flavors in July. The innovative flavors under its Signature Select brand ranged from a Cinnamon Churro Ice Cream with Honey Bun Swirl to a Lemon Cheesecake Ice Cream. A line of non-dairy flavors launched under its Open Nature brand, too.
Other notable innovative products from the year include the first caffeinated sparkling water under the Signature Select Soleil line, an offering of high-quality wines and Signature Reserve whiskey, and a host of Open Nature free-from meats, foods, oat milk, paper plates and housewares, bamboo toothbrushes and more.
In all, it is a huge arsenal of brands to manage, each with a different identity. However, by comparison to a true national brand, it is the Albertsons lifestyle brands that give it a huge advantage. These brands can be purchased across the store, starting with its Signature Select line that also has Signature Farms, Signature Cafe and premium Signature Reserve offshoots. O Organics and Open Nature are two other thriving lifestyle brands.
“A huge portion of our innovation every year falls under those two brands because they can’t be replicated,” Coester said. “They are lifestyle brands that drive full basket shops in our stores. We’re proud of that.”
Every brand in the Own Brands group has its own persona and target audience. Like a national brand, the teams layer in third party data from Mintel, Kantar and others to join their internal work, studying macro and micro trends, consumption trends and even conduct an annual survey of more than 2,000 households to get a temperature of what they’re looking for in products and to reconnect and ensure the brand positioning is spot on.
Brand and Supplier Love
The other brands under the team operate under a mix of strategies, as they are at varying levels of maturity. Safeway banners, for example, have had more time to build trust with shoppers and gain loyalty, whereas new banners have not.
The oldest brand in the bunch is Lucerne, a destination product that’s family focused, partnering with hundreds of dairy farms for more than 115 years. The brand covers milk, cheese, yogurt products and more. Waterfront Bistro is a newer brand with restaurant quality seafood that earlier this year earned a “Responsible Choice” logo update on its packaging because the products pass Albertsons’ strict Responsible Seafood Policy, a guarantee that the seafood has been responsibly sourced.
Primo Taglio provides high quality deli meats and cheeses. Plated provides a premium meal kit solution. Value Corner reaches the budget-conscious consumers, and debi lilly design is a proud floral shop offering in stores.
To make these brands happen, the Own Brands team works with more than 650 suppliers, and Coester joked that he has probably spoken to all of them in the last six months. Like many organizations, the COVID-19 pandemic has put a huge strain on the supply chain and brought partnerships closer together.
“Their ability to help us deliver against our shoppers’ needs in this unprecedented time has not gone unnoticed,” he said. “It’s been unbelievable, to be honest with you. I only think that happens because of the commitment and relationships we have built over the years.”
Cota agrees. “I always say, and I always believe that we are nothing without our vendor partnerships and suppliers. We need them as much as they need us.”
Albertsons generally has a large vendor summit every two years to have suppliers meet with Own Brands team members and share ideas and collaborate but it had to be postponed and will return in early 2021. With the many trade shows having to cancel altogether or go virtual, the team is still maintaining ways to keep relationships going.
Looking Ahead
The pandemic has clearly fueled growth for Albertsons. For the 16 weeks ended June 15, the retailer saw a 276% increase in digital sales to go along with a same-store sales rise of 26.5%. During that period, private brands gained trial from new consumers, and the goal now is to retain those new customers.
“Own Brands’ opportunity has always been showcasing high quality at a great value. During these unprecedented times, we have actually seen more trial than ever, which has translated into repeat purchases because people are amazed at the quality,” Coester said.
“I don’t believe our portfolio is just a fast follower like private label used to be in the past,” Jesser said. “We really have great innovation out there that you can’t find in a national brand that offers that choice and variety to our consumers.”
Shopper insights show that consumers are looking to eat healthier during the pandemic and are looking for preventive care, and that behavior may continue. Albertsons said it would continue to emphasize healthy options and its O Organics and Open Nature brands. The team also expects that its Signature Select line, which can fill a basket across the store, will continue to rise going forward.
The executive teams with Sankaran and chief merchandising officer Geoff White, as well as others, believe in Own Brands. Jesser said they’ve named Own Brands as “one of our four strategic initiatives” going forward.
“They’re completely standing behind us and driving the brand,” she said. “I think as an Own Brands team, as long as we focus on providing high-quality products and continue to innovate with on-trend products and offer that value to consumers, we’re going to be successful in the future.”
Coester acknowledged there has been a lot of work done when Albertsons and Safeway came together and Own Brands worked hard to position the brands as truly brands, moving them from banner brands to agnostic brands that stand on their own. “So we’ve had this work already underfoot, and I believe that’s a major contributor to the results we’re seeing.”
To him Own Brands is “an absolute imperative,” he said. “It’s a point of difference in every market we play in. We know that. Our operators and store directors know that. The pride our division teams have for their banners, they also have for these brands.”
Who’s Who on Albertsons’ Own Brands Team
Alice Chan, vice president of sales and marketing
Chan recently joined the team from PepsiCo’s Frito-Lay Division, implementing new programs and marketing initiatives to maximize revenue and profit. She has more than 17 years of experience in the CPG industry.
Chad Coester, senior vice president
Coester was promoted in September 2019, following his role as general vice president of sales and marketing, Own Brands. Throughout his 25 years with Albertsons, he’s held positions in procurement, e-commerce, and marketing systems and processes.
Nancy Cota, vice president of innovation and product management
A 2019 inductee into the Private Label Hall of Fame and a winner of the Lifetime Achievement Award from Women Impacting Storebrands’ Excellence, Cota started her career as a Courtesy Clerk in Safeway Stores, working her way through college. She’s been with the company for 44 years in several leadership roles in private brands
Don Davidson, vice president of strategic sourcing
Davidson has managed various sourcing teams over his 18 years with Albertsons, including both direct goods and indirect materials and services. He now works closely with suppliers and internal stakeholders to improve supply chain efficiencies, remove costs and drive Own Brands sales and profits.
Beto Galvan, vice president of innovation and product management
Another recent hire from PepsiCo’s Frito-Lay and Quaker divisions, Galvan has more than 20 years of experience in marketing, portfolio management, brand activation and business development in CPG.
Jennifer Jesser, vice president of finance and analytics
Jesser began her career in the Northern California Division of Safeway in 1992 and since has led teams in multiple functions through accounting, marketing, merchandising, systems and data structures.
Elizabeth Strydom, vice president of product development, regulatory affairs and culinary
Strydom owns multiple degrees in food science and has helped engineer new labeling legislation for the Own Brands portfolio.