Albertsons and the omni-channel household - bringing joy to grocery shopping

Stuart Lauchlan Profile picture for user slauchlan January 21, 2022 Audio mode
Summary:
Digital transformation is powering ahead at Albertsons Companies, building on a strong foundation in a disrupted industry sector.

groceries

Last time diginomica checked in on US grocery giant Albertsons Companies omni-channel progress, the stated ambition of CEO Vivek Sankaran was to bring “joy to grocery shopping” via ongoing digital transformation. Flash forward to the start of 2022 and it looks like progress is being made to realise this goal with the “omni-channel household” firmly in the company’s sights.

For its most recent quarter, digital sales were up 9% on the COVID boom of 2020 and 234% on a pre-COVID 2019 baseline. Importantly the number of omni-channel household customers increased fourfold year-on-year. Sankaran notes:

As omni-channel’s households spend three times more than in-store-only shoppers, we continue to increase our investments in digital omni-channel and loyalty, which drove increased identified households and higher customer engagement and retention. In the Just for U Loyalty Program, ongoing benefit enhancements continued to accelerate membership growth, which increased 17% year over year to 28 million members, and actively engaged members continued to increase. Actively engaged members are defined as those that are redeeming fuel or grocery rewards and, on average, spend four times more than nonactive members. In addition, the retention rate of actively engaged members continues to be over 93%.

For 2020, a key priority for the brand is to build on this and accelerate the rate of digital transformation underway, he affirms:

This digital transformation is designed to fuel our growth as we aim to drive increasing customer engagement, customer satisfaction, and customer retention through an area of convenient shopping experiences. For example, in loyalty, our new unified mobile app consolidates the customer's entire digital experience into one place where they can shop, download deals, request pharmacy services, and utilize gas and grocery rewards. Since the launch, we are seeing increasing downloads, higher traffic, and deeper customer engagement. In Drive Up & Go, we expanded our store count in Q3 and now cover 96% of our households with first-party pickup offerings. We also rolled out faster pick-up options. 

The firm reckons that over 80% of customer households are now able to collect Drive Up & Go orders within 2 hours. The other focus is of course on delivery with Albertsons tying up several third party partnerships to be able to execute here. Sankaran explains:

Through these partnerships, we're able to accelerate the speed of delivery while reducing delivery cost per order and allow customers to combine our delivery with an additional delivery from another retailer or restaurant in one trip through DoubleDash. We're also testing other new experimental pilots and concepts for last-mile delivery. In parallel to the rollout of our digital and omni-channel capabilities, we are also building a digital marketing platform that will allow our customers to engage with the food and brands they love.

Behind the scenes, there’s ongoing investment in new tech to drive in-store efficiencies, such as automating production planning and simplifying tasks in fresh food departments, resulting in better quality, higher in stocks and more time for customer interactions. Sankaran also points to mobile tech adoption and expansion:

We're also providing mobile tablets to store management to review daily sales, schematics, orders and provide associate training. This allows store management to spend more time on the sales floor assisting customers, ensuring improved store conditions and interacting with and training employees.

My take

New technology is allowing us to take the customer experience to new levels. Our digital initiatives continue to drive engagement and growth, and we remain focused on elevating service quality, speed of delivery, and the value of our loyalty offerings.

All told, there’s clear signs of progress towards the ‘joy’ ambition. The digital capabilities of the grocery business are going to continue to dominate in 2022, despite the Vaccine Economy encouraging more shoppers to return to physical store browsing. Albertsons achievements have perhaps been overshadowed at times by the likes of Walmart and Kroger and Ocado, but the all-important spade work is being done.

The impact of rising inflation rates is as yet unclear, but it’s crucial that the firm sticks to its investment plans around digital, whatever stormy waters lie ahead. Sankaran clearly recognises this, noting that back in early 2020, Drive Up and Go was available in around 200 stores; two years later and 96% of the company’s fleet of 2,200 stores can offer this facility:

We just feel we've got a great foundation now to accelerate those things that are about relationship building and stickiness. That's what we are focusing on…investments in digital and such, now it's about driving scale because we've got a great foundation.

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