Has Albertsons Completed Enough Initiatives To Take the Industry Lead?

Grubhub has partnered with Albertsons Companies Inc., integrating nearly 1,800 of its stores, including Albertsons, Safeway, and Vons, into Grubhub’s Marketplace. Customers can now order from these stores via the Grubhub app and website.

This partnership expands Grubhub’s grocery offerings and integrates with Grubhub+, providing unlimited $0 delivery on eligible orders. It also marks Grubhub’s first national grocery partnership and underscores its commitment to offering a comprehensive delivery service, catering to diverse consumer needs.

This is not the first time Albertsons has partnered with third-party delivery services to offer customers greater flexibility. Collaborations with Instacart for rush delivery and DoorDash for prepared and ready-to-eat offerings provide diverse delivery options. Moreover, a partnership with Uber enables customers to order a full range of groceries through the Uber platform. The launch of Albertsons Media Collective, a retail media network, also offers partners a digital marketing platform and omnichannel solutions, further enhancing the company’s market presence.

Albertsons Companies has been making significant strides to adapt and thrive in a constantly evolving business environment. By implementing various strategic changes to its business model over the past few years, Albertsons has successfully maintained its relevance and competitiveness, according to Zacks Equity Research. In 2022, a board-led review of potential strategic alternatives was initiated to boost the company’s growth and enhance stakeholder value. Over a period of three months, shares of this prominent food and drug retailer surged by 15.3%, contrasting sharply with the industry’s 16% decline at the time.

DoorDash’s success in launching a grocery delivery channel with over 150,000 non-restaurant retailers underscores the competitive delivery landscape in which Grubhub competes. Grocers, however, struggle to effectively deliver prepared foods such as deli products and sushi, often due to inadequate app interfaces and limited availability.

The outcome of the Albertsons and Kroger merger could significantly influence Grubhub’s grocery offerings, although it remains uncertain how it will unfold. Nevertheless, Grubhub sees the value in expanding its grocery delivery services, especially as groceries remain a more affordable option for consumers compared to dining out, even with added delivery costs.

As for Albertsons, the company has invested in expanding its digital and omnichannel capabilities to further engage customers and provide a seamless shopping experience. This includes a unified mobile application, digital wallet, AI chat features, and increased self-checkout installations. These enhancements contributed to a 9% year-over-year increase in digital sales in Q3 2022, with a 234% increase over two years. The company also expanded its Drive Up & Go curbside pickup service to over 2,000 locations and launched the Flash service, which allows “customers to receive their DriveUp & Go and delivery orders in as little as 30 minutes”

Key efforts to bolster product assortments, particularly in its fresh and Own Brands categories, have also significantly improved the customer experience.

Albertsons’ strategic emphasis on offering the right assortment in each local market, coupled with its loyalty program and frictionless payment options, has effectively attracted and retained customers. The recently updated “Albsertons for U” loyalty program has been a pivotal factor as well, driving customer acquisition and retention while incentivizing higher spending and frequent purchases. As of April 2024, the program has 38 million members.