The news: Albertsons faces a tough road ahead. The grocer cut its full-year identical sales outlook to a decline of 0.5% to 1.5%, down from its previous range of flat to 1% growth.

• The grocer’s lowest-income shoppers are under pressure, trading down to cheaper proteins while shifting toward private label and value-size packaging.
• The company also flagged rising supplier costs, which it expects to intensify in the second half of the year as it pushes vendors to absorb more of those increases.

Zooming out: The strain extends well beyond Albertsons. Roughly 3 in 5 US adults have changed their grocery shopping habits this year because of economic conditions, according to a CNN poll conducted by Social Science Research Solutions.

That caution is reshaping both where consumers spend and what they buy, with Albertsons losing share to larger rivals with sharper value propositions. Its share of US grocery spending fell from 4.8% in the 12 months ended June 30, 2024, to 4.5% in the 12 months ended June 30, 2026, per Numerator. Over the same period, Walmart held steady at 20.3%, while Costco rose from 7.6% to 8.3%.

Increased online competition is another issue. Amazon is making aggressive moves to win a greater share of consumers’ grocery spending. Its decision to fold perishables into same-day delivery helped perishables sales grow more than 40-fold last year, and they now account for nine of the top 10 items ordered through same-day delivery where available, CEO Andy Jassy wrote in his April shareholder letter. More than half (51%) of US digital buyers purchased food or beverages on Amazon in the past 30 days, according to a May survey from Bizrate Insights and EMARKETER.

Albertsons is responding with targeted rather than broad-based investments. Executives said the company is funding price cuts through productivity gains and focusing spending on markets and categories where customers are most sensitive to price, freshness, and convenience. Its private labels—including Signature Select, Lucerne, and O Organics—are at heart of that strategy, with a long-term goal of reaching 30% penetration.

Implications for retailers: Albertsons is caught in a structural squeeze. Its lowest-income shoppers are pulling back just as its strongest competitors are gaining ground with very different value propositions—Costco through membership-driven bulk value and Amazon through convenience and speed.

That leaves Albertsons with limited room to maneuver. It cannot out-discount Walmart, nor can it compete on convenience with Amazon or Walmart. Instead, it is leaning into targeted pricing, private label, and digital engagement to deepen loyalty with its core customers, which may help limit its losses. But Albertsons needs to give shoppers a clearer reason to choose it over lower-cost or more convenient alternatives.