Albertsons Doubles Down on Digital Post-Kroger Merger Setback

Under CEO Vivek Sankaran, Albertsons has invested heavily in digital transformation, customer engagement, and operational efficiency. Even after the halt of the proposed merger with Kroger, the company remained committed to expanding its digital capabilities, improving customer experiences and positioning itself for long-term growth.

“While we are disappointed the merger was terminated, we never stopped investing in our business and our customers,” Sankaran said Wednesday (Jan. 8) during the company’s third-quarter earnings call. “The last two years, we’ve driven customer growth through digital connections, enhancing the customer value proposition, modernizing technical capabilities, and our fully integrated mobile app.”

Sankaran said the mobile app personalizes customer experiences and streamline services, both in-store and online. By leveraging this technology, Albertsons has been able to maintain strong ties with its most loyal customers, elevating engagement and driving sales growth.

While third-quarter net sales increased 1.2%, to $18.77 billion, identical sales grew 2%, and digital sales rose 23%.

“We expect our digital business to grow substantially,” Chief Financial Officer Sharon McCollam told analysts.

Leveraging Data

Albertsons’ digital transformation centers on its ability to leverage customer data through four primary platforms, Sankaran said: eCommerce, loyalty programs, pharmacy, and mobile app integration. These platforms improve inventory management, create personalized shopping experiences and capture customer preferences to refine eCommerce and loyalty offerings. In April, Albertsons revamped its loyalty program, simplifying the process of earning and redeeming points for discounts. This change has driven higher engagement and increased spending, underscoring the effectiveness of targeted digital initiatives, he said.

“These investments will help us more deeply engage our most loyal customers and generate data,” Sankaran said. “Our fully integrated app will help us capture these opportunities. Pharmacy and health penetration is driven by the integration of our pharmacy offerings into our mobile app. Sincerely Health is a key catalyst in loyalty growth. And when customers enter our stores, we want them to connect with us digitally through real-time coupons and assist customers with their shopping lists. We have invested strategically to make technology the key enabler in all major future growth initiatives. We are engaging customers in our digital platforms and driving traffic to our stores.”

Albertsons’ investments in technology infrastructure, including modernizing its supply chain systems, introducing self-checkout options and streamlining operations to improve efficiency are part of a larger plan to save $1.5 billion over the next few years, a goal Sankaran is confident the company will achieve through continued innovation and cost-effective practices.

“We’ve always delivered productivity,” Sankaran said, “and that productivity engine continues. The nature of that is to find pennies everywhere and we’ve been doing that for two years.”

Data Gathering

In addition to its digital initiatives, Albertsons has expanded its retail media network, Sankaran said, an emerging revenue stream that allows the company to capitalize on the wealth of data it gathers from its digital platforms. This offers another layer of growth, as Albertsons can create more personalized and effective marketing solutions for its suppliers and partners.

Looking ahead, Sankaran is confident that Albertsons can accelerate its growth rates despite the challenges presented by competitors like Walmart. Even in a cautious consumer environment, the company is optimistic about capturing new customers and increasing wallet share with existing ones. By continuing to invest in digital platforms, loyalty programs and technology, Albertsons seeks to enhance its competitive edge.

“We must elevate our performance,” Sankaran said. “We have to accelerate our growth rates to compete with the very best. Customers are cautious and tend to shop more retailers. But 50 million households shopped with us in the past 12 months. Consumers are seeing value in what we offer at the prices we charge. We don’t have a macro problem, but there are some categories where we have to get sharper. Our philosophy has always been finding ways to add value … customers may not be able to get elsewhere.”