Dive Brief:

• Albertsons Companies, parent company of dozens of brands including Safeway, Vons and Shaw’s, has announced a partnership with Greycroft, a venture capital firm that invests in internet and mobile markets.
• The two companies will create a $50 million fund to invest in emerging companies and technologies in the grocery sector. Greycroft says that as they scale, e-commerce companies will be able to tap into Albertsons’ 34 million weekly customers, and that a brick-and-mortar strategy will allow them to reach the entire U.S. market.
• The investment is part of Albertsons' broader strategy to find the best opportunities to work on new and emerging technologies impacting grocery stores. Shane Sampson, the grocer's chief marketing and merchandising officer, said in a press release that the company has a continued commitment to evolve so that it meets the shopping needs of its customers, whether online or in-person. 

Dive Insight:

This is not the first, nor will it be the last, attempt by a large-scale grocer to partner with, invest in or acquire emerging food and technology companies. Technology is at the heart of the grocery industry’s transformation, affecting everything from operations and marketing to e-commerce and grocery delivery; customer acquisition to product curation and merchandising. Supermarket survival depends on a company’s ability to adapt to technology and use it to expand capabilities.

The Albertsons-Greycroft partnership could be mutually beneficial. Albertsons is a household name with a captive audience of 34 million weekly customers, which offers a treasure trove of data and an immediate customer base for emerging technology companies. Albertsons, in turn, will benefit from a ground floor look at technologies that might be the next big thing in grocery, which the company could leverage for its own business.

Nearly every major grocer is investing heavily in their digital strategies since Amazon acquired Whole Foods a year ago. However, most investments have been larger acquisitions of established tech companies or partnerships with service providers for e-commerce fulfillment. Albertsons’ decision to take a role in funding them, rather than acquiring them, is innovative and keeps the company in the game against competitors like Amazon and Whole Foods. 

Since buying Plated late last year, Albertsons has made multiple efforts to stand out among other grocers and take on Amazon. In addition to the Greycroft partnership, a planned acquisition of Rite-Aid is in progress. In the digital space, a major strategy is being implemented to advance Albertsons’ mobile, e-commerce and digital efforts. This includes last month’s launch of O Organics, an e-store powered by Instacart, and the creation of a digital marketplace for small brands earlier this year.

The key to Albertsons’ success will rest heavily upon its ability to execute these various efforts well, and synchronize them to deliver an optimal e-commerce experience.