Albertsons’ Loyalty Program Gives Kroger a Digital Boost

As Kroger and Albertsons gear up for their merger, the former may benefit from the latter’s recent digital growth, with eCommerce transactions and loyalty engagement on the rise.

Grocery giant Albertsons, which operates a range of major grocery chains including Safeway, Vons, Jewel-Osco and others, said in an earnings release Tuesday (Oct. 18) that digital sales rose 36% and its membership grew 16% to 31.8 million during the fiscal second quarter ended Sept. 10.

“Our team continued to deliver strong performance during the second quarter,” CEO Vivek Sankaran said in the release. “Throughout the quarter, we continued to invest in our digital transformation, our differentiation in Fresh, and the modernization of our capabilities. As we look ahead to the balance of the year, we believe we are well-positioned to further accelerate in each of these areas.”

Indeed, loyalty programs can go a long way toward building customer relationships and incentivizing frequent visits, according to data from PYMNTS’ study “Decoding Customer Affinity: The Customer Loyalty to Merchants Survey 2022,” created in collaboration with Toshiba Global Commerce Solutions.

According to the study, 42% of grocery shoppers stated that the availability of loyalty programs with rewards they like would improve their loyalty to merchants. However, only 5% of consumers stated that loyalty programs are the single most influential factor when selecting a grocer from which to purchase. More important to most grocery shoppers are factors such as price and proximity.

With the merger between leading United States pure-play grocer Kroger and Albertsons, announced Friday (Oct. 14), the latter’s loyalty strength will be added to the former’s competitive advantage. The deal is expected to close in early 2024, pending regulatory approval.

Read more: Kroger-Albertsons Merger Creates Pickup and Delivery Powerhouse

“Through our combined loyalty programs and data science capabilities, we will offer customers a more personalized experience providing savings on more products that matter most to them,” Kroger CEO Rodney McMullen said on a call Friday discussing the merger agreement. “We will enhance our seamless shopping experience, maximizing reach, creating more meaningful promotions and deepening our relationships with customers.”

Kroger and Albertsons have taken similar approaches to driving digital loyalty, each learning from the other. For instance, after Albertsons launched its FreshPass membership program in August 2021, offering free delivery and other perks for a set monthly or annual rate, Kroger began testing its Boost membership program, which offers similar benefits, in November 2021.

With these programs, the two companies are also competing with Walmart, the world’s largest grocer, which has its Walmart+ free delivery membership. All three grocers’ programs offer rewards opportunities, savings on fuel and other perks in addition to fee-free delivery.

Kroger noted in its presentation to investors that, in pooling its loyalty insights with Albertsons’, the merged company will have greater ability to personalize the experience and target consumers’ habits, creating “one of the most comprehensive first-party data repositories in the food and retail space,” and yielding “more relevant recommendations and promotions across price points.”