Dive Brief:

• Albertsons' same-store sales rose 13.8% in the second quarter compared with the same period in 2019, the grocer announced Tuesday. Net sales for the period increased 11.2%, to $15.8 billion.
• Digital sales for the supermarket chain were up 243% during the quarter that ended Sept. 12, with revenue from Drive Up and Go customers especially strong, Albertsons President and CEO Vivek Sankaran said during its earnings call.
• ​Albertsons is stepping up its investments in e-commerce and software aimed at increasing efficiency, and is on track to record $1 billion in productivity savings during the next three years, Sankaran said. Shares in the company, which went public in June, were up nearly 5% in morning trading as investors digested the company’s results.

Dive Insight:

Albertsons is focusing heavily on increasing its profitability as it charts its path as a newly public company, and Sankaran said he expects e-commerce to be one of the pillars of its success going forward.

Even as the company’s identical-store sales growth has declined compared with the first quarter, when it topped 26%, the grocery’s digital operations are turning in stellar results.

Albertsons’ curbside pickup service is the company’s biggest digital sales driver, rising more than 1,000% during the quarter on a year-over-year basis. The service is not only growing faster than delivery, it can also make money, Sankaran said. “There are times when we see ... that even on a transaction basis, it is profitable. That's what's exciting us."

The company added pickup service to more than 200 stores bringing the number of stores with curbside pickup service to 950. Albertsons expects to offer curbside pickup surface at 1,400 of its approximately 2,250 locations by the end of the current fiscal year, with 1,800 stores on track to offer the service by the end of the next fiscal year, Sankaran said.

Albertsons is also bullish on the prospects for micro-fulfillment centers to strengthen its digital operations. The two MFCs the company currently has in operation notched a 25% improvement in labor productivity during Q2, and the company has started construction on four additional facilities, Sankaran said. Albertsons is planning six more MFCs over the next year and a half.

Sankaran said shoppers spend more when they use e-commerce services, noting that when in-store customers use online ordering services, their overall spending increases by an average of 27%. 

Albertsons is also seeking to capitalize as people look for ways to expand their at-home eating options, Sankaran said, which he said gives the company a bigger market than just the traditional grocery sector to pursue.

“There's a narrative that we are going to turn the switch and everything is going to go back to 2019. I don't believe that,” Sankaran said. “I believe that we're going to go through this phase and come out of it with different behaviors.”

He noted Albertsons is also benefiting from its emphasis on fresh items, noting that seafood sales grew 46% in Q2 compared with the same period last year. Among non-food items, Albertsons saw floral sales rise 20%, he said.

Sankaran added that he expects the improvements the company has been making to yield benefits well into the future.

“Our confidence in the strategy that we've got going is improving with every quarter. So that's one one factor that's driving us to say, in this new normalized environment, we will come out better than we went in,” Sankaran said.