CEO Vivek Sankaran Talks Albertsons’ ‘Transformation’

Citing market share gains, customer retention and “robust” performance, Albertsons Cos. President and CEO Vivek Sankaran said he is confident in the grocer’s “transformation” during Morgan Stanley’s virtual Global Consumer and Retail Conference last week.

Vivek Sankaran

During the virtual fireside chat, Sankaran spoke about four themes guiding the new Albertsons: running great stores that emphasize fresh and store brands; an accelerated e-commerce agenda; driving productivity and reinvesting in growth; and talent and culture, according to a Sentieo transcript. 

1. Running Great Stores

Running great stores is No. 1 for the CEO, as it is the “core of the business. It’s what generates the cash,” said Sankaran, who defines a great store today as one that is safe and well-stocked with an emphasis on fresh—including meals—along with an extensive own brands portfolio.

Virtually overnight the grocery industry went from an obsession with on-the-go to everyone eating at home in a pandemic-driven recession. And with so much of the workforce working from home, lunch is one area in particular where grocery can grow, said Sankaran, who puts the entire lunch market both food eaten at home and away from home at $1.6 trillion.

“We are going to get into the meals business,” Sankaran said. And as consumers increasingly look to recreate the restaurant experience at home, Albertsons has seen sales of its prime cuts of beef up significantly, along with crustaceans such as lobster. Wines priced over $100 are up 90% at Albertsons stores, Sankaran reported.

Related:Inside Albertsons’ Massive New Market Street Store

2. Elevated E-Commerce

While Albertsons was “nowhere [near] where we needed to be to accommodate the amount of volume we had,” said Sankaran of its e-commerce platform at the beginning of the pandemic, the company has rapidly accelerated its digital presence, doing in a few months what would have taken years to achieve prior to COVID, he asserted.

In second-quarter 2020, 950 Albertsons stores offered Drive Up & Go. Sankaran predicts the Boise, Idaho-based company will get to 1,400 by this fiscal year and 1,800 soon after. It will get there, he said, through a strategy centered around its stores, with locations well-positioned in high population density areas, which translates to a smaller last-mile problem to solve.

“We believe in having a strong first-party business,” Sankaran said. “When I say first-party business, we pick, we put it in the car, we deliver, etc. And we’re committed to building it. And then we’re going to have partners because … I think you will find the third parties adding value and being part of the ecosystem.”

Expect to see e-commerce playing an increasingly important role for the grocery chain. When it comes to lessons learned in 2020, Sankaran said he’s “surprised by how much e-commerce contributes to growth—incremental growth.”

3. Driving Productivity

With the pandemic, grocery became an essential business, one that consumers continue to rely upon more than ever before. As a result, Albertsons sees more engaged customers coming to its franchise, who shop the whole store, and increasingly in fresh. Grocers such as Albertsons that offer a one-stop shop have also enjoyed a tremendous competitive advantage during the pandemic as consumers continue to consolidate their shopping trips.

Sankaran sees increased demand for the chain’s one-stop shop appeal as proving a “catalyst for a step-change in omnichannel” and its ability to remain supplied. Albertsons’ microfulfillment centers are also helping with productivity, and the grocer plans to expand upon this business model.

4. Talent and Culture

Sankaran describes the culture of Albertsons as one that is nimble and fast across the board and with regard to staffing, attracting top talent and strategically redistributing it when necessary.

“[Albertsons] celebrates being extremely local, yet at the same time, harness[es] scale where we need to, in how we buy, in leveraging technology, launching things like e-commerce and a loyalty program. We’ve added a lot of talent to the company in critical places, moved talent within the company into critical roles," he said.