The company released quarterly earnings Tuesday (Oct. 13) showing a sales dip of 0.8%, and said it was pausing its financial guidance as it undertakes a sweeping business review.
“Sales and earnings growth have not met our expectations,” Meg Whitman, Albertsons’ recently appointed executive chair, said on an earnings call.
“Market share trends have lagged, and despite many individual successes across the business, we’re not delivering results consistent with the quality of our assets. We must turn things around. The first step is to take a hard look at the business, challenge assumptions, and decide what actions create the greatest value for customers and shareholders.”
At the center of the strategic pivot is a rapidly shifting consumer landscape, with persistent high inflation and steep fuel costs squeezing household budgets.
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“I would say that as you’re hearing across the industry, we are seeing the customer remain under pressure,” CEO Susan Morris said. “Particularly our lower-income customers, they’re still trading down, looking for value, buying more private label. And we expect to see that continue for the short term.”
Recent research by PYMNTS Intelligence shows that paycheck-to-paycheck consumers have little room to reduce expenses as it is.
“Many paycheck-to-paycheck consumers have lost hope of breaking the cycle,” PYMNTS wrote Tuesday. “Among consumers knocked into paycheck-to-paycheck living by an external shock, such as a job loss or medical emergency, and have no room left to cut essential expenses, 48% believe they will always live paycheck to paycheck.”
In response to these pressures, Albertsons is accelerating its own-brands lineup with expanded variety and sharper price points.
Rather than resorting to widespread discounting, Albertsons is taking a surgical, data-driven approach to localized pricing and promotions. By its fourth-quarter earnings call, Albertsons plans to unveil a refreshed customer strategy, expanded cost reductions, and an updated multi-year financial roadmap.
Meanwhile, digital engagement remains a bright spot for the grocery chain. eCommerce penetration expanded behind double-digit growth, while pharmacy customers continue to drive powerful omnichannel loyalty, generating total store baskets three times larger than non-pharmacy shoppers.
Additional research by PYMNTS Intelligence has found that tighter budgets are leading consumers to do more of their grocery shopping online. Consumers facing high financial stress are 6 percentage points more likely than lower-stress consumers to have made their latest grocery purchase online, at 16% versus 10%.
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