Name: Albertsons CEO on why digital sales are surging and consumers buying despite high food prices
Uploaded: 2021-11-03
Duration: 9 min 20 s
Description: Vivek Sankaran: 'We're stronger now than before the pandemic'

Vivek Sankaran: "We're stronger now than before the pandemic"

Albertsons CEO on why digital sales are surging and consumers buying despite high food prices

Leadership

Albertsons CEO: Digital sales surging despite inflation

vivid, thank you so much for joining us to talk about Albertans. You know, I bet you get asked this a lot, what is Albertsons and people are probably surprised to hear that your grocery store chain is uh, number two in the United States, right behind Kroger and also Your range number 52 on the Fortune 500 list of America's biggest companies. And to put that in perspective, Albertson's is bigger than coca, cola, american Express and Nike. So what's the secret to your success? You're right. People may not know us at Albertsons where they live, where tom tom in Dallas Charles, in boston, jewel, Osco in Chicago Safeway in the West Coast bonds and pavilions and it's a wonderful set of brands that matters so much locally. But what's, what's special I think is that over the years we've brought 270,000 people together uh, to make this magic happen every day at the front line. And they've, they've done, done even more. And it's been a special, especially to see them over the last 18 months in the most difficult of times with the capacity and capability that they've shown to serve customers. It's been, it's been wonderful to watch. Well, I understand that Albertsons had a big growth spurt during the pandemic. You've said that the pandemic was quote an accelerant. What happens Around March of last year in 2020 when the pandemic was upon us and we all knew we had to take it seriously? Most of us. It was so new to all of us. And what was important at that point is speed, agility, moving quickly on decisions uh, at the front line again and we have a culture that celebrates local ownership. You know, our store managers are owners of results owners of customer service. They're entrepreneurs in their own right and the way they think. And so that combination of us providing guidance from the center, yet allowing people to move quickly with agility at the front line catalyst. The growth for us. And that combination created some momentum. And the great thing about it is we've held that momentum for several months now and we're not out of the pandemic but we're stronger now than before. We went into the pandemic. Well you expanded into e commerce in a big way during the pandemic. Tell us a little bit about that. What are some of the tech innovations that you have today that you didn't have before the pandemic? We had to do it because our customers were coming in. They were wanted things delivered at home. They wanted to pick it up in the parking lot. A lot of the software, we had to allocate the slots and when you come and take all had to be re with, we were not ready for the, for the volume of business that was coming our way and we wrote rewrote that we rewrote the technology on how we pick product in our stores very quickly. We kept opening, we opened at a record speed, what we call drive up and go capability in our stores where you just walk up and you drive your car and we drop it in your car. We expanded it that quickly. Um, and so it was a combination of what we did physically in our stores and all of the software we rewrote. And there was a sense of urgency susie because there was, there was no, we had to respond, We learned to work differently because of that. In one way, It's better to try something and be 80% right than to overthink it and be late in today's world. I've just learned through this pandemic that you're better off moving forward and then zigging and zagging rather than waiting to think about what the right way to move forward is. You know, and, and we learned to be agile that way as a, As a principle in management. Well, it's certainly paying off. I I understand that your digital sales have more than tripled during the pandemic. And in your latest financial results, we see that your sales and revenues came in way better than expected. Your stock is up more than 60% so far this year. Can Albertsons keep growing at this pace? Considering so many challenges in the marketplace, the supply chain crisis, for example, inflation pressures, uh, labor shortages, rising food prices, given those external forces, can you can Albertson keep up this pace of growth, everybody's got those external forces so that I think the company that wins is going to manage those external forces and within those forces better than anybody else? So when it comes to inflation, yes, we're going to see inflation across the board. And as I've always said, we expected inflation to be higher on the back after the front half. But you give consumers choice, you give them an own brands if they want an opening price point and at the same time you give them give the customer wants, you know what you be if you give them that choice, so you give them that range with the supply chain, it's about being nimble. It's about again giving consumers choice. I will tell you though, it's not as bad as it was through the pandemic, at least from the supply chain standpoint. So managing these challenges creates an advantage. Talk to us a little bit more about your take on consumer spending when when you talk to consumers, how do they feel about paying such high prices for food? Yes, prices are a concern. But I also look at behavior, we look at behavior in our store and I'll point to two things. One we are always looking for whether people are doing what we call trade down in our industry. So you were buying product X and now you're buying the product but it's a cheaper product. We haven't seen that. Um And the second thing we look for is are people spending money on what we think of as discretionary items are you still buying flowers for your home? And we have these people are still doing that. So while there's inflation, I think the consumer is healthy, they've got good balance sheets. You can see that from just general numbers, but we're seeing their behavior suggesting that while there's inflation, they still have the capacity and, and, and want the products that they're buying from us. Um, that gives me some comfort, at least in the near term, that the consumers still coming back for these things. So tell us what's next for Albertans, amazing transformation. What more do you want to do? We have so much opportunity in the fundamentals of our business. We still have. We, we, we are, I think of us as being in the second inning of this transformation. You see, we're doing well, we're gaining market share. We feel good about our results, but we're deeply, uh, deeply dissatisfied with where we need to be right, We've got, we have more growth to be had in our digital business. We have more productivity, um, in our business that we can continue to capture. We always believe we can improve our customer service. We can always run better stores. And that's what I tell investors and analysts and others that, yes, we should celebrate the results, but we still have many more innings to play that you worked for many years at Texaco before you became Ceo of Albertans two years ago. What insight from your Pepsi experience are now guiding the things that you're doing at Albertsons. Oh yes, Susie. I was a consultant when I joined Pepsico and I, I'm so thankful now to Pepsico for making me an operator. And the one lesson that I picked up, I was at frito Lay division of Pepsico for eight years and that freedom, you've always learned that there are no cash registers at the corporate office. You have to recognize that it's all about what happens at the front line every day. That was a fabulous lesson. And, and we have a bigger front line than frito Lay and from day one, I've always had that mindset. I try never to forget it by being in the stores. Well, speaking of lessons, this is your first job as Ceo of a huge Fortune 500 company. What's been the key leadership lesson that you've learned so far. It's very humbling to have to tell you, you know, you realize that there's so much you don't know in this job and there's so much that changes. Um, and the only way you can figure it out is by listening to people and find and seeing a pattern and being just being there for them. Um, and, and all I can do really is set priorities guide and get the right talent and allocate capital. You know, it's very simple, there's not much more I can do and it's really been humbling um And and the change in mindset to do that. Um But it's also been a lot of fun. Well I understand the fact that when you were at Pepsi former Ceo Indra knew we was one of your mentors. Has she given you any leadership advice? Oh gosh. I went to Pepsico because of Indra linda taught me one thing when I when I joined Pepsico, like if you don't like something in Pepsico fix it, you're a senior leader, you fix it, own it and fix it. And that changed my mindset so dramatically and I served me so well uh and in my role today I can't complain. I gotta fix it.