The news: Albertsons’ customers are increasingly focused on value.
- In Q3, shoppers traded down to smaller packages and private labels, used more coupons, and stuck to lists, CEO Susan Morris said on the company’s earnings call.
- That sharpened focus on value creates an opportunity for Albertsons to deepen loyalty by helping customers save through multiple paths: expanded private labels, budget tools in the app, and personalized discounts in its loyalty program.
Albertsons’ multifaceted value strategy helped it beat analysts’ top and bottom-line expectations, and prompted it to raise its full-year outlook for same-store sales and adjusted net income.
The opportunity: Albertsons contends that investors are undervaluing its business and that it has significant growth potential. To help lift its stock price, Albertsons plans to repurchase $750 million in shares. That’s on top of the $2 billion it announced in December for buybacks following its abandoned merger with Kroger.
At the same time, it’s making several moves to grow its business, including:
- Improve ecommerce efficiency and profitability by using data and technology to streamline in-store picking—for single or batch orders—to boost productivity and speed. The company is reassessing its ecommerce footprint to expand where it makes sense and, in some stores, retrofitting space with extra refrigeration or hot-food stations to meet demand.
- Increase the utility of its loyalty program. Albertsons now lets customers have cash-off rewards auto-applied to orders, an option that 40% of engaged members choose. It also expanded the program beyond groceries with “U For Travel,” an Expedia-powered partnership that offers up to 10% cash back on travel bookings, redeemable for grocery purchases.
- Making its app more user-friendly. The retailer aims for its app to be a “Swiss Army knife of tools that simplify planning, shopping, saving and more, whether customers shop in-store or online,” Morris said. Advanced personalization and AI, aim to drive discovery.
- Doubling down on value. The grocer sees significant opportunity to increase the visibility and appeal of its own brands to raise its penetration from 25% to 30%.
Our take: As consumers increasingly prioritize value and convenience, Albertsons can deepen loyalty and sustain growth through targeted discounts, personalized products, ingredient and recipe recommendations, and a smoother online experience.