Albertson's, Boise, Idaho, is focusing its energies on developing "a fitness regimen to get the company back into peak competitive shape," Larry Johnston, chairman and chief executive officer, told investors at the annual Credit Suisse First Boston Food and Drug Retail Conference.
The goal, he said, is "to create the world's No. 1 food-and-drug retailer in all aspects. We're far from there yet, but we're solidly on the right path."
Johnston and Peter Lynch, president and chief operating officer, listed several initiatives Albertson's is pursuing to achieve its goals, including:
Rolling out its new Albertson's Preferred loyalty card to additional strategic markets later this year following a successful test in the Dallas-Fort Worth area that began in November.
"The old Albertson's didn't believe in cards," Johnston said. "But research in the Dallas-Fort Worth area indicated 60% to 70% of Tom Thumb and Kroger customers would buy more from Albertson's if we offered a loyalty card, and we're going market-by-market now [to determine where to expand]."
Expanding its combination-store program to additional strategic markets this year, based on "amazing sales synergies" at an Albertson's Sav-on combo in Reno, Nev., and an Albertson's-Osco combo in Tucson, Ariz., Lynch said.
Expanding Albertson's Express, the chain's fuel centers and convenience stores, "because the convenience stores offer a taste of what's available at the adjacent supermarket," Lynch said. Albertson's has approximately 200 Express locations.
Taking a more aggressive position on corpor-ate brands. "We're studying the market possibilities diligently," Lynch said, "and we anticipate an intensified effort in that area, including a new marketing and operational focus; increased advertising, merchandising and promotion; and opportunities to develop a premium label."
Corporate brands at Albertson's account for 17% to 17.5% of sales, Lynch noted, "while some competitors are at 23% to 24%, and that difference is our opportunity to grow."
Continuing to focus on its price image. "We've made substantial progress in our relative price position, moving to parity or better against major grocery competitors in 15 of our 20 top markets, and we've seen a shift in our consumer image as a result," Lynch indicated.
Converting distribution facilities from profit centers to a break-even model as part of an effort to get the retail and distribution segments working together to serve customers better.
Lynch said Albertson's has adopted an "aisle-friendly" pallet program that saves stocking time by having the warehouse create pallets with a single item on each so they can be moved to a store department in a single step. "The program may add expense at the distribution level, but it saves money at store level," he said. He added that the company is testing in Denver a program to measure the dynamics of aligning procurement and distribution.
