Albertsons sees digital success, but the channel has yet to turn a profit

Yahoo

3 days ago

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Albertsons is investing in its digital customer experience and loyalty program as it approaches the breakeven point for its e-commerce business, executives said on a Q1 2025 earnings call Tuesday.
To enhance its digital shopping, the company introduced a shop assist feature, which lets customers and store associates communicate during the order fulfillment process, according to CEO Susan Morris, who took on the role in May.
The Albertsons for U loyalty program grew membership 14% year over year to 47 million members in the first quarter, according to Morris. She attributed the growth to last year's initiative to make the program easier to understand.
While the grocer's sales and loyalty growth have been stable, Albertsons is still charting an uncertain future following the breakup of its merger with Kroger, and cost-cutting measures led to layoffs this year.
The grocer's loyalty program will play an important role in the grocer's future, Morris told The Wall Street Journal in an interview last month. Albertsons will take better advantage of loyalty member data to determine which items can withstand higher prices and which need a price drop to bring in more customers.
Albertsons for U could support this goal with rapid growth. Membership has steadily increased in recent quarters, up from 41.4 million in Q1 2024.
Albertsons executives highlighted e-commerce as one of the company's biggest growth, customer acquisition and customer retention opportunities, though the channel has yet to achieve profitability.
'Our focus on delivering exceptional customer service experience is fueling new customer acquisition and strengthening existing customer retention,' Morris said. 'To do this, we're continuing to enhance our digital shopping experience, including the introduction of AI and interactive features that deliver both ease and convenience.'
One way the grocer aims to improve flexibility is by letting customers add items to an online order right until picking starts. The change was made because 'shoppers often think of one more item they need just after an order is placed,' Morris said.
E-commerce sales were up 25% year over year in the first quarter, but penetration remains below grocery industry peers, according to Morris. Digital sales accounted for 9% of Albertsons' total grocery revenue in the quarter.
Albertsons is bringing its mobile app into the store as well, according to Morris. Digital customers use it three times per week on average for capabilities including personalized meal planning and in-store product location tools.
'What began as a tool for enabling e-commerce and delivering great deals is now a Swiss Army knife of tools that makes customers' lives easier regardless of whether they're shopping in our stores or online,' Morris said.
Albertsons' identical sales rose 2.8% year over year in the first quarter of 2025, according to an earnings report. Net revenue increased 2.5% year-over-year to $24.9 billion during the period.