2019 Retail Pacesetters: Albertsons builds connections between food, pharmacy

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2019 Retail Pacesetters: Albertsons builds connections between food, pharmacy

By Mark Hamstra - 05/07/2019
Boise, Idaho-based Albertsons has a long history of both grocery retailing and pharmacy operations, and the company is continuing to invest in the connections between food and health.

The company, which was named DSN’s 2018 Pharmacy Innovator of the Year, remains a destination for consumers seeking a range of health-and-wellness solutions as it expands its e-commerce, private brands and prepared foods capabilities to stay relevant with today’s consumers.

Albertsons posted sales of $46.5 billion through the first three quarters of 2018, including an identical-store sales increase of 1.9% in the third quarter. Pharmacy sales accounted for about 8.3% of the year-to-date total, the company said in filings with the Securities and Exchange Commission.

Although Albertsons’ planned acquisition of Rite Aid fell through in 2018, the company continues to invest in state-of-the-art healthcare initiatives.

For example, last year the company partnered with Akos Medical Clinic to open two high-tech medical clinics in Safeway stores. The clinics include artificial intelligence- and augmented reality-powered self-guided medical stations. The stations collect such data as weight, temperature, blood pressure and blood oxygen count, as well as images and sounds that can be sent to a healthcare provider for video consultation. Albertsons said it planned to expand the clinics to dozens more Safeway locations throughout the first half of 2019.

“What [chairman emeritus] Bob Miller and [chairman] Jim Donald and the division presidents are doing — combining the pharmacy, which is the biggest salient strength of Albertsons, with food — is really helping drive comparable same-store sales,” said Burt Flickinger, managing director at New York-based consulting firm Strategic Resource Group.

Albertsons also has been ramping up its e-commerce efforts, using its own delivery vehicles and personnel, as well as third-party delivery firms. Its home delivery service was available in 11 of the top 15 U.S. markets as of late last year. The company continues to expand its click-and-collect service, dubbed Drive Up & Go, and its meal-kit delivery service, Plated, which it also has begun making available for in-store purchases.

Albertsons also maintains a comprehensive loyalty program with its “just for U” offering that it has expanded throughout the organization in the wake of the Safeway merger.

The company launched more than 1,100 new private-label items in 2018, and four of its own brands now tally more than $1 billion a year in annual sales. In the third quarter, private-label brand penetration reached 25.2% of sales.

Neil Stern, senior partner at McMillan Doolittle in Chicago, said Albertsons has been busy trying a lot of different approaches to stay relevant with consumers. “It is just a question of how do they define themselves to the world? There are a lot of things they are doing, and there are a lot of moving pieces.”

As of Dec. 1, Albertsons operated 2,277 retail food and drug stores under 20 different banners across 35 states, with 1,743 pharmacies, 395 fuel centers, 23 dedicated distribution centers, five Plated fulfillment centers, and 20 manufacturing facilities.

This story is one of 20 profiles of retailers who are making a difference in the industry. To read more, click here