Why Your CPG Brand Needs an Albertsons E-Commerce Strategy
It seems only fitting that one of the most underrated online grocery operations is headquartered in one of America’s most underrated cities. Boise, Idaho, home of Albertsons Companies, is located in an area known as Treasure Valley, which is ironic considering the fact that most CPG brands have yet to discover the online grocery “treasure” that’s “buried” at the chain’s network of stores. Even though it’s the second-largest pure-play grocer in America, Albertsons has mostly flown under the radar in the highly competitive, highly publicized online grocery land grab that has been happening over the last several years.
That quickly changed, however, under the leadership of new CEO Vivek Sankaran, who has significantly increased the company’s focus on digital commerce. This focus helped Albertsons achieve digital sales growth of 39% year over year in fiscal 2019. Building on the prior year’s momentum, Albertsons was able to successfully navigate and capitalize on the shifts in the retailing environment as a result of COVID-19 to grow digital sales 276% year over year in the first quarter of fiscal 2020. With Albertsons now being publicly-traded on the NYSE, investors will put continual pressure on its digital strategy to exceed the demands of even the toughest market conditions.
This article provides five reasons why every CPG brand needs a dedicated Albertsons e-commerce strategy.
Sizable Store Fleet
Albertsons didn’t become the second-largest pure-play grocer in America without having a hefty number of physical locations. The company currently operates just over 2,250 grocery stores across 34 states and under 20 well-known banners, including Albertsons, Safeway, Vons, Jewel-Osco and Randalls. Albertsons’ sizable store fleet presents a massive opportunity for the company in terms of its omnichannel capabilities, especially now that the coronavirus pandemic has dramatically accelerated consumer adoption of curbside pickup and on-demand delivery.
Click and collect – the most popular online grocery fulfillment method – has almost doubled in growth since the start of the pandemic. By leveraging stores as a central component of its digital strategy, Albertsons can capitalize on the growing curbside pickup trend. The company already offers its Drive Up & Go curbside pickup program at close to one-third of its stores, and that number is expected to almost double before the end of its fiscal year in late February 2021.
The vast brick-and-mortar store fleet of Albertsons also plays a vital role in its ability to offer on-demand delivery. Albertsons has its own delivery service that’s available in nearly 65% of its stores. Add in third-party delivery services like Instacart, and 90% of Albertsons stores provide on-demand delivery for online shoppers.
Additionally, Albertsons is taking inspiration from competitors like Target and Walmart and remodeling its stores to better support its omnichannel initiatives. During the first quarter of fiscal 2020, Albertsons remodeled 46 stores, in addition to the approximately 500 completed in fiscal 2019. These store remodels are focused on optimizing layouts for new shopping patterns to make it simpler for customers, employees and third-party gig workers.
While click-and-collect and on-demand delivery have now become mainstream consumer jargon, a third grocery e-commerce fulfillment method is quietly growing in importance. Micro-fulfillment (or hyperlocal fulfillment) is the use of small warehouses that are compact enough to place almost anywhere.
Albertsons is currently piloting micro-fulfillment centers for online grocery orders through a strategic partnership with automation specialist Takeoff Technologies. The initial agreement, announced in October 2018, was to test two micro-fulfillment centers inside Safeway locations in the two largest cities in Northern California. The companies expanded their partnership in December 2019, with Albertsons agreeing to purchase additional micro-fulfillment centers from Takeoff. With population density growing in major cities over the last decade, it makes sense that Albertsons is leaning into micro-fulfillment, especially when you consider the fact that it has stores in 80% of the largest U.S. metropolitan statistical areas.
The partnership between Albertsons and Takeoff Technologies utilizes artificial intelligence-enabled robots that can pick items about 14 times faster than manual in-store picking. These automated robots can also safely scale vertical racking systems, thus allowing smaller spaces to hold up to 18,000 SKUs. Another benefit of automated micro-fulfillment is that it requires fewer humans to be packed into a single working space, thus lowering the risk of having to shut down part of the supply chain over an outbreak of COVID-19 or other infectious diseases.
The more consumers shop for groceries online through third-party marketplaces such as those on Walmart and Amazon, the more they become familiar with the concept of the infinite aisle. After a short period of time, those consumers shift from discovering the infinite aisle to expecting it at every retailer. The good news for Albertsons is that it launched the Albertsons Marketplace in early 2018, beating Kroger, its biggest competitor, by more than two years.
Albertsons’ marketplace strategy aims to broaden the merchandising assortment of its food and wellness categories by targeting smaller CPG brands that might otherwise be overlooked by its retail chains. Suppliers ship products directly to shoppers and are responsible for customer service. The marketplace gives suppliers a chance to partner with Albertsons and potentially gain in-store distribution if their products perform well online.
To provide a better search experience for its online shoppers, Albertsons has joined forces with BloomReach, a digital experience platform that uses artificial intelligence and machine learning to better understand shoppers’ search queries and deliver the most relevant results possible. BloomReach makes it easy for retailers like Albertsons to deliver first-class search experiences that rival those of large-scale marketplaces like Amazon and Walmart. Since implementing BloomReach’s search functionality on its websites, Albertsons has seen improvements in search conversion rates and expanded customer baskets. Albertsons’ superior search experience gives it a significant competitive advantage compared to other grocery retailers, many of whom are building their own search functionality from scratch in house.
Albertsons Performance Media
In January 2018, Albertsons launched Albertsons Performance Media (APM), a marketing platform and service that allows CPG vendor partners to deliver targeted ad campaigns to shoppers and measure the impact those ads have on in-store sales. Powered by digital analytics and marketing firm Quotient Technology, APM delivers ad campaigns across Albertsons’ own digital properties, as well as Quotient’s distribution network, which includes Coupons.com and thousands of third-party publishing partners. Quotient’s proprietary system – called Quotient Retailer IQ – uses point-of-sale data collected from Albertsons’ vast network of stores to measure the results of suppliers’ ad campaigns.
Through APM, suppliers can direct shoppers to their branded landing pages, including shoppable content such as recipes that allow customers to add products directly to their carts. Quotient’s acquisition of influencer marketing firm Ahalogy has enhanced APM’s capabilities, allowing it to offer targeted social media and influencer marketing campaigns. Thanks to Quotient’s acquisition of Elevaate, APM is also able to offer sponsored search and product ad placements, ensuring suppliers’ products show up high in search results on Albertsons banner store websites.
OneSpace Can Help
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