When diginomica last checked out grocery retailer Albertsons, the firm aimed to bring “joy to grocery shopping” for omni-channel households. Flash forward to 2022 with real world stores re-opened and that ambition continues on course, according to CEO Vivek Sankaran:
Omni-channel households spend three times more than in-store only shoppers, and during Q4 omni-channel households grew by nearly five times versus the fourth quarter of 2019. In addition, as our investments drove increased customer engagement and retention, Q4 2021 digital sales increased 5% year-over-year and 287% on a two-year stack basis.
A leading food and drug retailer with stores across 34 US states and the District of Columbia, Albertsons group includes more than 20 banners, including Albertsons, Safeway, Vons, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci's Food Lovers Market.
Over the past few months, omni-channel expansion has continued, with additional drive-up-and-go capabilities and new micro-fulfilment centers, bringing the total there to seven, says Sankaran:
In drive-up-and-go, we reached our goal of over 2,000 stores serving 99% of our households. In online delivery, we expanded third party partnerships to offer more choices and accelerate the speed of delivery, and in both drive-up-and-go and online delivery, we reduced costs per order by adding five additional MFCs and three-way rooms, reconfiguring our picking software and staffing models and improving our forecasting algorithms.
There’s also been a heavy focus on getting closer to the customer via the organization’s loyalty Just For You loyalty program, Sankaran says:
Benefit enhancements continue to accelerate membership growth, which increased 18% year-over-year to nearly 30 million members and is up approximately 45% or over 9 million members since the fourth quarter of 2019. Actively-engaged members, defined as those redeeming coupons and fuel up grocery rewards also continued to increase, and the retention rate of these members remained over 90% at the end of the year. Remember that on average, actively-engaged members spend four times more than non-actively engaged customers.
An onging priority, he says, is the acceleration of digital and omni-channel capabilities to fuel growth and increase customer engagement, satisfaction and retention:
In loyalty, we launched in upscale our new Unified Mobile App (UMA). Eighty-seven percent of our digital orders were being placed in the UMA by the end of the fiscal year. We also introduced meal planning that offers recipes, including those that address dietary preferences such as vegetarian or gluten-free. Customers can seamlessly add all recipe ingredients to their shopping list or immediately purchase them in the UMA.
In digital, we are beginning to capitalize on our rich and proprietary data, recently launching the Albertson’s Media Collective (AMC). AMC offers new and existing business partners a robust in-store marketing platform that reaches our extensive customer network and leverages our strong market share especially in the 68% of markets where we hold the number one or number two share position. We expect AMC to be a leading growth and profit driver over the next several years.
With those successes notched up, attention is turning to the next phase of the wider Customers for Life transformation strategy. Sankaran explains:
Our belief and the evidence is that when we are at our best in the brick and mortar and digital worlds, our customers never leave us and spend more of their wallet with us. Customers for Life is built around this belief that satisfied customers create outsized lifetime value and that everything we do should enable more stickiness.
Customers for Life is anchored on placing the customer at the center of everything we do with the ultimate goal of supporting our customers every day, every week, and for a lifetime. We want our customers to interact with us daily, not only to shop but sometimes to simply consume relevant content about food or plan meals, or find information to inspire their wellbeing.
Our business model is pivoting to one that is loyalty-based, doubling down on our omni-channel engagement with customers beyond just transactions. We will elevate the in-store experience when they shop with us, expand our services and content-rich offerings, and build a set of competitive and timeless capabilities that create a compelling reason for our customers to seek a lifetime relationship with our team members and our banners.
There’s a long shopping list here, including:
- digitally connecting and engaging all customers through the mobile app and website so they can enjoy and curated experiences in e-commerce, the community, loyalty, health, and media.
- differentiating the store experience by deepening engagement through the use of technology, removing team member pain points to allow them to focus on customer service versus just tasks.
- simplifying the end-to-end shopping journey and evolving store operations to support omni-channel growth.
- enhancing offers by elevating distinctiveness in fresh, expanding the firm’s own brands products and services, including its ready-to-use program.
- enhancing product offerings in center store to address customers’ changing needs and preferences.
- modernizing capabilities through an improved supply chain, enhanced data and data analytics, ongoing productivity all built on the foundation of being “locally great and nationally strong”
- embedding ESG throughout operations.
Success against these priorities will be measured based on increased digital engagement, expanded merchandise and service offerings, a competitively differentiated omnichannel experience, and an accelerated set of digital and supply chain capabilities.
Our strategy is working and we are executing well against industry-wide pressures, and the transformation we began before the pandemic has significantly strengthened our company.
In our stores, we have accelerated remodels, implemented technology-enabled core processes, and advanced our capabilities in fresh. Leveraging our store base, we have built a scale omni-channel capability including drive up and go and online delivery that is proving to be sticky with customers who engage across channels.