Albertsons Looks To Make Impact With Price Format

This could be a boom or bust for Albertsons. My sense is that this will either be hugely successful or a blistering failure for them.

The need is probably there; if they can execute and really focus on the format, this could be a great tool to compete with Supercenters and Neighborhood Markets.

Albertsons is priced too high, with too little shopping advantages to really compete. They maintain clean stores with a front end that's managed better than average. The smaller foot prints and many convenient locations are really their key strengths. If they can maintain those characteristics along with a true low-cost strategy, they just might pull it off.

Anonymous

Certainly Aldi and Save-A-Lot are demonstrating that they can compete with Wal-Mart on price via their limited assortment offering. This format also offers something that Wal-Mart's big boxes don't offer - convenient quick in and out shopping trips. While this format will not likely gain the popularity in this country as it has in Europe, there appears to be plenty of room for more players in this space. Aldi's announcement to add 40 U.S. stores a year between now and 2010 certainly says that they see an opportunity.

Making it a stand-alone division and using a name not linked to Albertsons would seem to be right on target.

Todd Hale, Senior Vice President – Consumer Analytics, ACNielsen

Best news I've heard coming out of Albertsons in a while. Makes good sense to me. I've also heard they are very quietly beefing up their operations/logistics technology, and that this may give them a real shot in the arm. Has anybody else heard anything about this?

Warren Thayer, Editor & Managing Partner, Frozen & Dairy Buyer

My first question is, how does Albertsons do a limited assortment store in 60,000+ sq. ft.?

Second question is, when did Burt Flickinger suddenly start likening Albertsons? Hey Burt - this is Albertsons we are talking about. The same company who's prices were 27% higher than Wal-Mart.

Third question is, how can Albertsons possibly compete on price? Wal-Mart won't allow them to get close in price. And we know Albertsons can reduce their grosses 27% regardless of any cost reductions. If Wal-Mart sees any loss in market share they will simply put a stop to it.

The stores they plan to convert have been on a death watch ever since Wal-Mart came in and took a nice slice out of Albertsons sales. I was surprised to find they were not on the latest list of stores Albertsons has quietly been trying to peddle in Texas and Louisiana. Given the fact that Albertsons really doesn't understand supermarket retailing in Louisiana and Texas, I don't believe they will be successful. The massive store closings in both states over the past few years indicates to me that they should continue their track record of miscalculating the consumers in this area. Why did the light bulb turn on only when the volume was beaten down to $200k per week? It's like a boxer throwing a punch after he has been knocked out.

A&P has tried this in Detroit with their Food Basics format but it appears to be only a lateral move. And Detroit metro does not have Wal-Mart Supercenter as the regional market share leader.

David Livingston, Principal, DJL Research

I was there, right there, with an office in the building and full access to all merchandising meetings, when Kmart was struggling with integrating groceries into their mix. Scary. As a grocery guy by training and experience, I saw many wrong roads taken, but had to remain mute. A hard-goods/soft-goods retailer trying to get up to speed on selling groceries.

Now Albertsons, a good conventional food merchant, is venturing into the discount business. Barbara Walchli has it right, I believe, that they need a discount store veteran to run the new stores. History shows us that the time required to get up-to-speed can be deadly (Kmart). It's better to hit the ground running.

And for cost control, am I the only one thinking that Albertsons should look into grabbing some of those low-lease-cost locations that Winn-Dixie is looking to dump?

M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

Keep it simple for success. Albertsons is either absurdly low with 10 for 10 or BOGO, or absurdly high with every day retails. Manufacturers and vendors don't move enough everyday product to offset the below-cost offerings on promotion. That promotional well will dry up at some point. The progression destroys a basis for a reasonable price point, and leave Albertson's (and Safeway) open to cherry picking.

They really need to examine a more moderate high-low program.

'GMROI'

Count me as one that thinks that this is the last format that they should try. Trying to beat Wal-Mart at price just doesn't make too much sense to me. And I agree if they have to try it, let someone run it that has the right experience. I doubt that trying to run it like a low price version of Albertsons will work very well.

Art Williams, Retail Marketing Consultant/Analyst, Independent