Albertsons is the third-largest grocery chain in the U.S., preceded by Kroger at number two and Walmart at number one. According to The Washington Post, Albertsons owns 19 brands, including its namesake store, Safeway, Vons, and Jewel-Osco, and operates over 2,000 stores in the U.S. Until recently, this landscape was about to make a seismic shift, as Kroger and Albertsons planned what would have been the largest grocery store merger in history.
However, in Dec. 2024, a federal judge blocked the $20 billion merger, saying it would wipe out supermarket competition and, therefore, leave consumers paying higher prices. Now that the dust has settled, Albertsons' CEO is speaking out about his plans for 2025, which include major savings for shoppers.
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Albertsons plans to cut $1.5 billion in costs over the next three years.
On Wednesday, Albertsons held its first earnings call since the blocked merger. As the Wall Street Journal noted, the company "reported higher quarterly profits and raised its earnings outlook for the year."
Perhaps the biggest takeaway is that the Boise, Idaho-based grocer plans to cut $1.5 billion in costs over the next three years, according to a transcript of the call shared by Fortune.
To achieve this, Albertsons CEO Vivek Sankaran laid out four priorities that are part of the company's "customers for life" strategy:
- Driving customer growth and engagement through digital connection
- Enhancing the customer value proposition
- Modernizing capabilities through technology
- Driving transformational productivity
"Over the next three years, we plan to deliver $1.5 billion in savings to invest in our customer value proposition and growth initiatives, as well as to offset inflationary headwinds," Sankaran said. "To achieve this, we’re leveraging our recent investments in technology and the latest innovations in business best practices to build industry-leading capabilities and reduce costs."
RELATED: 6 Ways to Save Big on Groceries at Kroger.
Here's how Albertsons' strategy will save shoppers money.
Of course, for any of these investments to secure Albertsons' future, the grocer must retain current shoppers and attract new customers.
Customer loyalty program
One way they plan to do that is by leveraging the customer loyalty program, For U. Available through the Albertsons app, it offers personalized deals, scannable coupons, a free birthday gift, and a free item every month.
However, as of April 2024, customers can use their accumulated rewards points to get dollars off their grocery bill or at gas stations.
"Since the launch, we’ve seen more frequent engagement, higher retention and increased customer spend," Sankaran said. "Going forward, we expect to continue to see increased adoption, and we will leverage strategic partnerships to provide our members with even more ways to get rewarded."
Another new feature of the For U app is that it now uses "an in-store geo-located mobile feature that delivers real-time coupons," Sankaran noted.
Technology to cut costs
The other part of the plan intended to save customers money is Albertsons' technology investments.
As Sankaran shared, the company intends to leverage its "consolidated scale to buy goods for resale" and rebalance its "onshore and offshore activities" through automation in order to reduce overall costs.
"By the end of 2025, we expect 30% of our distribution volume to be automated and our [warehouse management system] to be fully implemented company-wide. These supply chain initiatives improve in-stock conditions, differentiate our fresh quality, lower our cost to serve, and improve our end-to-end data analytics capabilities," he explained.
He added that, in-store, the company will take advantage of AI to reduce " inventory shrinkage" and improve food quality, all of which is intended to keep prices low.
Best Life has reached out to Albertsons for comment on any additional savings plans and will update this story with their response.
