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Retailers

Albertsons Shoots for $1B in E-Commerce Business

Retailer targets 189.9% sales increase in 2018

Relying on growth from its newly acquired meal kit business, expansion of home delivery and click-and-collect, and new partnerships such as the pending acquisition of Rite Aid, Albertsons Cos. has set an ambitious goal of $1 billion in e-commerce sales in 2018.

Albertsons had digital sales of approximately $345 million in 2017, and is shooting for an 189.9% sales increase this year.

The figures were shared during a lengthy presentation for investors last week highlighting the pending Rite Aid merger, which Albertsons officials said would help to create a differentiated food retailer and accelerate ongoing investments to transform stores behind new capabilities that bring convenience to shoppers. These include development of “Amazon Go-like” technologies that would allow shoppers to skip checkout while buying items such as prepared foods and Plated meal kits in Albertsons-owned grocery stores, or while pumping gas at its fuel stations.

Each of those developing initiatives were publicly announced for the first time during the presentation, as was a partnership with the restaurant-delivery platform Grubhub, which is now delivering prepared meals and sandwiches from some Albertsons supermarket locations. These offerings will bring depth to Albertsons’ digital platform, while options for on-demand home delivery and click-and-collect—all set to expand this year—provide breadth, said Shane Sampson, Albertsons’ EVP and chief marketing and merchandising officer.

“We’ve got a diverse set of e-commerce capabilities to delight the customer, outside of the walls and inside of the walls,” Sampson said.

Albertsons is making technology investments built around bringing additional convenience to the shopper, he said.

“There’s a lot around the front-end payment, making life seamless and easier through the checkout process, speeding up the front end through the EMV chip, speeding up payments, [and] scan-bag-go technology,” he said. “We’re experimenting with Amazon Go-like technology today—for example, where somebody could come in and pick up a Plated order, they would know that you’re in the store, it would tender an order, and you can leave outside of the check stands.”

Similarly, Albertsons and Rite Aid earlier this month conducted a test of a “one-touch fuel” option where fuel pumps recognized connected customers as they pulled up, automatically turned themselves on and arranged for payment.

“It’s all about connectivity, making sure we have the right Wi-Fi, make sure that we have the right broadband and telecom in our stores,” Sampson said. Albertsons expects to have Wi-Fi in all of its stores by September.

Black Tie Service

For Albertsons—which not long ago took pride in not offering self-checkouts at stores as a means to emphasize personal service—the new “just walk out” technology initiatives may come as a bit of a surprise. However, officials are now looking at technology as a means to enhance service and differentiate from competitors.

Sampson touted “black tie, white glove” offerings in home delivery and click-and-collect, which he said could increase relevancy and convenience for customers upon the integration of acquired businesses such as Rite Aid and Plated. Officials said combining those offerings would allow Albertsons to customize offerings for shoppers—for example, creating Plated meals that meet specific customer dietary restrictions and can be utilized as part of Rite Aid’s “Weigh Forward” weight-management programs, selling Plated subscriptions in Rite Aid stores, and utilizing company delivery drivers and personal shoppers as a means to sell them.

“Who better to tell that to our customers than our black-tie, white-glove Drive Up & Go service [and] home delivery service?” Sampson said.

Albertsons also intends to expand its loyalty and personalized offers for shoppers. The company said it has hired a new chief data analytics officer, who Sampson said would “turbocharge” its digital and loyalty platforms with an eye on additional opportunities to cross-sell and upsell.

Switching over Albertsons-owned stores to Safeway’s back-end platform will allow the company to expand the “Just For U” platform providing personalized deals to additional banners, replacing Albertsons’ legacy MyMixx program at banners such as Shaw’s, Acme and Jewel. That is expected to be complete by September, Sampson said.

Just For U is currently providing around 400 million personalized deals every week to 13 million registered households. But there’s further opportunity in integrating Rite Aid’s loyalty program, known as Wellness+, officials said.

“We think there’s a huge leveraging opportunity in the loyalty programs and leveraging the whole ecosystem from Plated all the way through Just For U to Wellness+ and some other areas that we think are going to be very natural for us to fit into,” said Kevin Turner, the former Microsoft and Sam’s Club CEO named as vice chairman and special advisor to Albertsons last year. “We’re going to continue to provide more and more delivery options, so we’re just getting started. Even though we’ve got some national rollouts of that done, we’re going to keep giving choices and options around that, and I think that’s a big deal.”

The “infinite aisle” known as Albertsons Marketplace announced earlier this year is “going to really broaden the assortment very quickly, using and leveraging suppliers’ inventories and supply chains direct to consumer,” Turned said. “We’re pretty excited about that.”

Turner said Albertsons had “big initiatives” around cloud computing and mobility. “Those are the two areas that we can differentiate from all the traditional grocery store competitors, specifically, and accelerate the amount of development and innovation that we’re able to bring to the marketplace.”

Jim Donald, the newly named president of Albertsons, highlighted a new employee promise as part of the company’s philosophy that he said would bridge its service legacy with its high-tech future: “Make every day a better day.”

“This is not an elevator speech,” Donald said. “It’s a promise and it’s one that we’ll apply and accelerate the merger of Albertsons and Rite Aid. You might ask why is this important? Our business, our communities, our customers and our associates are becoming more diverse in every four-wall and no-wall environment that we operate in, whether it’s age, gender, religion or color. Our job regarding this statement is simple: to provide all our customers what they want, when they want it, whatever, however way they choose in the most efficient manner possible. The winner in the bricks and mortar/e-commerce environment will be the entity that speaks the language of all their customers and their potential customers.”

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