Albertsons’ recent “big bets” on digital customer experience and merchandising intelligence helped the retailer hold same store sales steady in recent months despite higher prices at the gas pump and across categories due to the US war with Iran and tariffs, which prompted some consumers to pullback on spending.
“In grocery, units and identical-store sales in Q4 remained pressured in our lowest income cohorts,” due to “ongoing affordability changes,” including pressure from changes to government nutrition assistance programs, lingering inflation around 2% and more recently higher fuel prices, Albertsons CEO Susan Morris said yesterday during the company’s fourth quarter earnings call.
And yet, she added, the retailer’s identical store sales still increased 0.7% in the quarter and rose 2% for the full year – which she attributed in part to steady consumer demand but also strategic decisions by Albertsons to “elevate the customer experience” and investments that deepen “the personal, digital and loyalty relationship … so customers feel recognized, seen and valued wherever they engage with us.”
She added: “We’re very clear-eyed about today’s consumer. They remain focused on value, making a balanced value proposition more critical than ever.”
This is especially important for lower-income households, which Morris described as “more elastic,” while “middle- and upper-income customers remain more stable in terms of the pressures that we’re seeing there.”
While the economic impact is bifurcated, all customers are focused on value, she added.
As such, she said, “our approach to this is deliberate and sustainable,” including “surgically investing where it matters most to our customer” and “getting sharper on key value items and driving own brands penetration, both funded through structural margin improvement and productivity, not short-term trade-offs.
“It also includes the convenience, speed and value we can offer with our assortment. The result is building a balanced value equation that works for customers and in turn for all stakeholders while protecting long-term returns and making us our customer’s retailer of choice.”
Personalized promotions, enhanced merchandising help hold share
Fundamental to Albertsons’ plan to strengthen its connection with consumers and position itself for “sustainable, profitable growth in fiscal 2026,” are “four big bets” on technology and AI that allow the retailer to offer price-sensitive shoppers the value they need, Morris said.
These bets include digital customer experience, merchandising intelligence, labor optimization and supply chain optimization.
“In digital customer experience, AI-driven capabilities are modernizing the way customers shop, delivering personalization that drives higher conversion, larger baskets and greater loyalty,” Morris said.
Likewise, under merchandising intelligence, the retailer is “in flight with tools that are reimagining price and promotional strategy, as well as category management and assortment decisions,” she added.
For example, “in the quarter, our personalized ad pilots delivered a 90% lift in conversion and click-through rates, validating a clear path to scaled personalization, driving higher relevance and an improved return on ad spend,” which in turn strengthens the customer value proposition, “making shopping more affordable, intuitive and personalized,” Morris explained.
In addition, she said, the company’s loyalty program is gaining momentum with membership up 12% to more than 51 million customers who have higher spending, reward redemption and transactions than non-members.
“Customers are gravitating toward immediate value, including increasing redemption through the cash-off option, which is clear evidence that we’re meeting their needs in a value-focused environment,” Morris said.
Protecting margins and prices
Albertsons also is “closing pricing gaps where it matters” through productivity funding, “not through margin erosion,” Morris said.
“We closed the gap on pricing versus MULO in the fourth quarter, so we are seeing improvements there. I think we shared a year ago, we have a very different price position across the many markets that we operate in. Our approach is very surgical, not broad-based. We’re investing where it matters most to customer value perception, especially in key value items on our private label or our own brands, and also through loyalty and personalization. We’re funding that through structural productivity and margin improvement, not looking for short-term trade-offs. That’s how we’re improving the price competitive perspective of our business, but also protecting long-term gross margin growth,” she explained.
Moving forward, this surgical approach to pricing and promotions will help the retailer maintain and grow sales even if external pressures continue to mount, she said.
