Albertson's Four-Step Success Plan
NEW YORK -- While many of the banners under Boise, Idaho-based grocer Albertson's umbrella may feel like local grocers to shoppers, it is the unified action taking place behind the scenes that will sharpen the retail conglomerates competitive edge in coming years, Felicia Thornton, the company's e.v.p. and c.f.o. told attendees at the Banc of America Securities 2005 Consumer Conference yesterday.
Albertson's is relying on four key initiatives aimed at sales, differentiation, cost savings, and asset management. The highlights of the plan are:
Sales:
-- Check The Price: Albertsons lowered and established an EDLP on products that customers buy most frequently, and on which they have the highest sensitivity to price. "These products have the greatest propensity to influence customer shopping behavior," said Thornton. "This helped us grow share in the items and increase sales in their sub categories. Because of the program's success, we have more than doubled the number of items in the program."
-- Wield private label: The company worked on improving its existing corporate brands and adding new ones, and is focusing on further developing its Essencia premium line. "We have also expanded the range of our private label offering with two nonfoods private label brands," Thornton said.
-- Coordinate promotion efforts across all banners, when possible.
Differentiation:
-- Deploy new merchandising ideas: The Shaws acquisition brought two merchandising ideas to Albertsons, which the retailer has since extended to its other banners. "Shop the World" is a modular space in stores that offers international foods and seasonings. The "Wild Harvest" is natural and organic merchandising in a boutique setting.
-- Beef up online offerings: Albertson's plans to expand its online offerings into seven new markets.
Cost Savings:
-- Streamline the supply chain: By leveraging technology whenever possible, the company expects to continue trimming cost from the supply chain. "We now have better visibility into our supply chain, and have been able to reach our $1 billion cost savings goal for 2004," said Thornton. "We’re looking to squeeze an additional 25 million the first quarter of this year."
-- Sharpen pricing: "We are looking to invest our cost savings into becoming more competitive in our pricing against lower-end operators," said Thornton.
Asset base improvement:
-- Analyze the ROI: Johnston and Thornton analyze every asset -- and potential asset -- with an eye toward ROI. Current operations that do not meet strict requirements are phased out, and promising assets, like Shaws, are acquired.
Albertson's is relying on four key initiatives aimed at sales, differentiation, cost savings, and asset management. The highlights of the plan are:
Sales:
-- Check The Price: Albertsons lowered and established an EDLP on products that customers buy most frequently, and on which they have the highest sensitivity to price. "These products have the greatest propensity to influence customer shopping behavior," said Thornton. "This helped us grow share in the items and increase sales in their sub categories. Because of the program's success, we have more than doubled the number of items in the program."
-- Wield private label: The company worked on improving its existing corporate brands and adding new ones, and is focusing on further developing its Essencia premium line. "We have also expanded the range of our private label offering with two nonfoods private label brands," Thornton said.
-- Coordinate promotion efforts across all banners, when possible.
Differentiation:
-- Deploy new merchandising ideas: The Shaws acquisition brought two merchandising ideas to Albertsons, which the retailer has since extended to its other banners. "Shop the World" is a modular space in stores that offers international foods and seasonings. The "Wild Harvest" is natural and organic merchandising in a boutique setting.
-- Beef up online offerings: Albertson's plans to expand its online offerings into seven new markets.
Cost Savings:
-- Streamline the supply chain: By leveraging technology whenever possible, the company expects to continue trimming cost from the supply chain. "We now have better visibility into our supply chain, and have been able to reach our $1 billion cost savings goal for 2004," said Thornton. "We’re looking to squeeze an additional 25 million the first quarter of this year."
-- Sharpen pricing: "We are looking to invest our cost savings into becoming more competitive in our pricing against lower-end operators," said Thornton.
Asset base improvement:
-- Analyze the ROI: Johnston and Thornton analyze every asset -- and potential asset -- with an eye toward ROI. Current operations that do not meet strict requirements are phased out, and promising assets, like Shaws, are acquired.