Albertsons IPO Filing Reveals Major Tech Expansion

Need to Know

• Albertsons has filed for IPO, noting that “deep and lasting relationships with our customers by delivering an easy, exciting and friendly shopping experience” will help drive profitable growth and create a long runway for the grocer. 
• The filing papers outline the company’s tech-focused plans and detail initiatives to refresh its entire digital interface to create an easy-to-use and fully integrated digital experience. 
• Moving forward, Albertsons will use $375 million to upgrade its online and digital capabilities.
• The papers also outline grocery pickup expansion plans to include 600 locations in 2020 and an increase of in-store micro fulfillment centers by at least 10 over the next two years.
• Albertsons reported almost $61 billion in sales for the fiscal year ended February 2019.

Analysis

Albertsons’ expansion plans affect many of its services, indicating the grocer’s awareness of changing customer behaviors. In its IPO filing, the second-largest supermarket chain in the US increased plans for investment in digital and technology projects and an overhaul of its digital customer experience. 

The papers also outlined steps the grocer has taken to improve its business since its last attempt at IPO filing in 2015.

“We have simplified our merchandising programs, automated our front end scheduling processes and expanded self-checkout in 435 additional stores during the first three quarters of fiscal 2019,” the company said in the IPO filing. “These enhancements have been instrumental in improving store-level productivity, allowing us to increase our focus on the customer.” 

Looking forward, the grocer plans to use its estimated $375 million in investments toward digital and technology projects. “These investments include upgraded pricing and promotional tools and more integrated and easy-to-use customer-facing digital applications,” the company noted in the filing. 

The grocer also plans to use advanced analytics and simulation tools to improve its product assortment and pricing strategies specific for each market. In regards to supply chain, increased robotics and process automation will help Albertsons drive labor productivity and reduce shink and other inventory issues. 

Another notable change comes in the area of grocery pickup and micro-fulfillment centers. Toted as the future of online grocery, Albertsons plans to increase in-store micro fulfillment centers by at least 10 over the next two years. Currently, the grocers’ use of localized fulfillment centers allows them to pack 60-item digital orders in as quickly as five minutes. 

Albertsons’ Pinterest partnerships stand to gain traction with the grocer’s digital interface refresh. Pinners shopping in Albertsons stores are currently able to now take a photo of an item’s price tag in-store and be taken directly to the recipe on Pinterest via a mobile app. 

“We believe that e-commerce is a strong growth engine that drives incremental sales. We are refreshing our entire digital interface to create a more personalized, easy-to-use and fully integrated digital experience. We are improving our mobile applications to enable more personalized rewards and services like advanced basket-building tools and product, meal and recipe recommendations,” the company said in the IPO filings.