Albertsons Companies saw its digital sales increase 24% during a quarter in which its identical store sales increased 2.5%.
During the quarter ended Sept. 7, the food and drug retailer also reported a 15% increase in its loyalty members, bringing the total to 43 million, according to a Tuesday (Oct. 15) earnings release.
“In the second quarter of fiscal 2024, investments in our Customers for Life strategy continued to drive strong growth in our digital sales and pharmacy operations,” Vivek Sankaran, CEO of Albertsons Companies, said in the release. “We also drove strong year-over-year growth in our loyalty members and omnichannel shoppers, and accelerated growth in our Albertsons Media Collective.”
The Customers for Life strategy was introduced in 2022 and includes getting customers more engaged with the brand’s eCommerce and loyalty offerings as well as personalizing its digital experience and promotional offers.
Albertsons Media Collective is the company’s retail media arm. In June, that organization debuted a solution called Collective TV that helps advertisers target, measure and optimize campaigns across streaming, digital video and linear TV.
Among its digital sales offerings, Albertsons and Instacart updated their partnership during the quarter to include a free pickup service, in which shoppers can enter an order on Instacart to be picked up at Albertsons stores. Another addition is Albertsons Rapid, which offers customers a 30-minute delivery for convenience store orders, including prepared foods, grocery staples and household essentials.
On the identical sales front, Albertsons’ gains were driven by strong growth in pharmacy sales, according to the Tuesday earnings release.
The expansion of these channels led to a gross margin rate decrease of 44 basis points compared to the same quarter the previous year due to the lower gross margin rate of pharmacy sales and the picking and delivery costs associated with digital sales, per the release.
Looking ahead, Albertsons Companies expects to see continuing headwinds in the form of higher wages and benefits, increasing mix of lower-margin pharmacy and digital businesses, and growing competition, Sankaran said in the release.
“We expect these headwinds to be partially offset by ongoing and new productivity initiatives,” Sankaran said.
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