Albertsons Companies Sees Digital Growth Recovery Driven by Loyalty Deals

In the quarter ended Sept. 11, 2021, grocery giant Albertsons Companies saw pandemic-driven eCommerce habits stick, with digital sales continuing to grow over 2020 levels. The grocer, parent company of brands Albertsons, Safeway, Jewel-Osco and Vons, among others, announced Monday (Oct. 18) that digital sales grew 5% year over year, for a cumulative 248% growth over 2019 levels. This digital strength was driven in part by the launch of the grocer’s new app and loyalty program.

“[In] Q1, we have seen that in store traffic was going up a lot. We saw [the] digital traffic … rate was coming down,” Albertsons CEO Vivek Sankaran told analysts on a call. “[Now] the traffic seems to have stabilized in the store...[and] about three weeks into this quarter, we started seeing a pickup in digital traffic.”

He attributed this pickup to the launch of the new app and to the continued investment in building out eCommerce fulfillment capabilities. Additionally, the Albertsons’ digital loyalty program grew the grocer’s omnichannel reach. The number of actively engaged loyalty program members grew 9%, the number of total members 17%, and the retention rate for active members was 93%.

“We are increasing our number of loyalty members, and as we enhance the benefits and enhance the efficiency and the experience the customer has in redeeming loyalty, et cetera, that will also be greatly helpful to advancing this,” Albertsons President and CFO Sharon McCollam told analysts.

She added that internal research shows that one of the major differentiators for Albertsons Companies’ brands is the deals these stores offer, including the ability to earn “special pricing through loyalty.” To that point, Sankaran noted that the company is getting increasingly sophisticated in its use of data, suggesting that, as the grocer gets better at offering personalized discounts to loyalty users, it will strengthen its value proposition.

In addition to incentivizing consumers to choose to shop with a given grocer, loyalty programs can also boost spending. Research from PYMNTS’ study “What Consumers Expect From Their Grocery Shopping Experiences,” a collaboration with ACI Worldwide, finds that not only do 63% of grocery loyalty program members say that loyalty programs impact their decisions about which grocery stores to use, but 61% also report that they spend more at grocery stores that have loyalty programs.

Read more: Digital Features Can Help Grocers Win Over 43 Percent Of Shoppers

Additionally, loyalty programs can also help grocery incumbents to win back their customers from eCommerce competitors. Nearly half of all grocery loyalty program members reported that loyalty programs would encourage them to purchase items that they now purchase online at their favorite grocery store instead.

As online grocery shifts toward rapid fulfillment, Albertsons Companies has also seen its digital sales benefit from the rollout of two-hour delivery, Sankaran noted, and from three-minute service for its DriveUp & Go curbside pickup program.

“People love the speed,” he said, “So our philosophy here is to keep giving customers … more speed in delivery, and more choices in delivery. And I think those fundamentals, as we open it up, continue to increase the number of omni channel customers we get.”