Albertsons Focuses on 4 Digital Platforms for Growth
Following its failed merger with The Kroger Co., Albertsons Cos. experienced some gains in its fourth quarter and fiscal year earnings, ending Feb. 22. In Q4, identical sales grew 2.3%, adjusted EBITDA was $855 million and adjusted earnings per share was 46 cents.
“Within the few months since the termination of the merger, our mojo is back,” noted Albertsons CEO Vivek Sankaran during the company's earnings call. “We are executing once again like we used to, and we have proof points and therefore more conviction to say that our strategy is right and working.”
This strategy, referred to as Customers for Life, includes investing in growth through four digital platforms.
“These platforms are designed to drive increased sales, more deeply engage our most loyal customers, increase customer lifetime value, and generate digital space and robust data for the Albertsons Media Collective,” explained Susan Morris, who will succeed Sankaran as CEO when he retires on May 1.
The four digital platforms guiding Albertsons growth are as follows:
1. E-Commerce
E-commerce jumped 24% in Q4 and the full year, with first-party far outpacing third-party growth.
“We operate our e-commerce business out of our stores, which allows us to leverage our rich asset base and proximity to our customers,” said Morris. “It also enables full access to our merchandise assortment, a fast and convenient Drive Up and Go experience, and robust delivery options. E-commerce penetration is now over 8% of grocery revenue, with our top-performing markets now over 10%."
Although more than 8% of grocery revenue is still below industry peers, Morris said that e-commerce penetration is poised to be one of Albertsons’ biggest growth opportunities for 2025 and beyond.
2. Loyalty
Loyalty membership at Albertsons grew by more than 15% year over year in Q4 to more than 45 million members, and at the same time actively engaged customers increased 12%.
“Our new simplified loyalty program is a key enabler of digital customer engagement and a rich source of data for the Albertsons Media Collective,” said Morris. “Through the unified mobile app, it allows customers to get personalized deals, to earn points, and to have an extended period of time to redeem them for fuel and grocery rewards or automatic cash off their grocery bill. Since launching the simplified program, 20% of engaged households are now electing the new cash-off option, reinforcing the customer desire for immediate value.”
Albertsons plans to continue to simplify and expand the program in fiscal 2025, which will include integrated strategic partnerships.
3. Pharmacy and Health
In Q4, pharmacy revenue increased 18% year over year, driven by script and immunization growth, customer satisfaction scores, and the ongoing integration of experiential health offerings in the company’s Sincerely Health mobile app.
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“Although the pharmacy business is financially dilutive, cross shoppers between grocery and pharmacy are exceptionally valuable, contributing outsized customer lifetime value to the total store,” explained Morris. “For this reason, in fiscal 2025, we will continue to invest in our pharmacy and health platform to drive increased customer engagement and loyalty.”
Albertsons also expects growth in scripts and immunizations as pharmacy competitors like Walgreens continue to close stores.
4. Integration of Mobile App for In-Store Use
“Launched in 2024, over 9 million customers have engaged with this in-store feature," said Morris. "When customers are in our stores, we want them to digitally engage with us, which requires us to raise the bar on store-level execution."
Albertsons' in-store geolocation mobile feature delivers real-time coupons, helps shoppers locate products, and assists customers with meal planning and generating shopping lists. In 2025, the company expects to drive increased customer engagement through this platform by adding additional conveniences and value.
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“All these digital platforms are working together to generate deeper customer engagement, increase digital inventory and enrich our data to accelerate growth in the Albertsons Media Collective,” said Morris.
The company also expects to build new partnerships that add even more digital inventory and capabilities to its media offerings. Last month, Albertsons Media Collective extended its partnership with omnichannel advertising management platform ADvendio. The platform is set to play a key role as Albertsons Media Collective continues expanding into new channels and markets.
As of Feb. 22, Albertsons Cos. operated 2,270 retail food and drug stores with 1,728 pharmacies, 405 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Boise, Idaho-based company operates stores across 34 states and the District of Columbia under more than 20 well-known banners. Albertsons is No. 9 on The PG 100, Progressive Grocer’s 2024 list of top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century.
