Last year, Vivek Sankaran joined Albertsons as president and CEO. After less than a year, the former PepsiCo Foods CEO lead the company through the first stages of the COVID-19 pandemic in the US, which saw a broad impact on the grocery sector.
In the months since, Albertsons saw a host of significant changes, including to its stores, to its workforce, with a summer IPO and quickly growing sales.
In his first interview with an Idaho news organization, Sankaran discussed the company’s role in the state, how they are adapting to the pandemic and competition – and what’s on the horizon for Albertsons Companies.
Audio of the conversation is posted to the BoiseDev podcast.
Albertsons and Boise
After a predecessor company sold the bulk of Albertsons’ stores to Supervalu Inc. in the 2000s, the home base in Boise shrank. But an offshoot company kept Boise as its home, and later acquired the stores back from Supervalu. It then added stores owned by Safeway to form an even-larger chain with Boise hosting the headquaters.
Sankaran says, that won’t change.
“It’s home. It’s our headquarters. A lot of us are there and will continue to be there. We’ve got a lot of stores with a lot of history around Boise and in Idaho more broadly,” he said. “We’ve brought in a lot of talent. We give talent a choice: Either Boise or Pleasonton, California.”
He said employees pick the locations for different reasons – but Boise remains a top choice.
“There are as many as people who chose California as they do Boise. Boise is a great place if you have a family and you have young kids. You can get more for your money and there’s a nice network for people to get into the communities there.”
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He thinks the state is doing many of the right things in attracting and retaining businesses like Albertsons – but more can always be done.
“The thing that always matters is creating the conditions to attract talent,” Sankaran said. “Talent in STEM (science, technology, engineering, and math), particularly engineering capabilities (is important). Doing more to attract that talent and create a critical mass for them so they can find career mobility in Boise will always be a plus.”
He said the area has momentum on that front, and he recently began working with local business leader peers to help do more.
“We just got a network of us together and had this first conversation,” he said – noting that the first discussion focused on pandemic response and employee safety. “The intent has been to get together to think about other things we can do to bring more talent and capabilities into the community.”
The pandemic’s next phase
The company made a number of shifts and adjustments in the key months of March and April. With the number of cases, deaths and governmental restrictions rising around the country, Sankaran says the company will respond.
“We are continuing all those safety protocols. We’ve never slowed down on those safety protocols. We’ve become better at it,” he said. “If there’s a surge of people coming in, we may have to restrict the people coming in.”
He said some states are restricting business capacity, and customers could again see changes to how they enter the store.
“You may end up in the inconvenience of a line for a while. But there is no relaxation of the safety protocols. People should feel comfortable that we are maintaining everything on that front.”
Masks in stores
The company, like many retailers, instituted a mask mandate in its stores. Many cities, counties, and states also implemented mask mandates, including Ada County. Sankaran further explained how employees are instructed to carry out those rules.
“(For employees), it is an expectation. If you are working in our store, you’re going to wear it,” he said. “If you’re a customer, we want you to wear it. Ninety-nine-point-nine percent of the people wear it. Some of the people don’t wear it because they’ve got a medical reason, some people don’t wear it because they choose not to.”
Some social media posts have complained that employees at Albertsons and other stores aren’t enforcing those rules. But Sankaran said front line workers try to find a balance.
“What we try not to do is create a big fuss. The number (not wearing masks) is small. We offer them a mask, but if they don’t want to wear it – we move on. But, generally, I see a lot more compliance on mask-wearing.”
The supply chain
Speaking of social media – you might have seen an uptick in posts about stores running out of toilet paper again. Overall, Sankaran says he “feels good” about the supply chain, and that the situation is different from spring.
“I think you’ll see different areas around the country run out of paper and cleaning products and such. I think people are doing a little bit of a stock up. It’s not like the last time around – it’s not like spring. It’s different.”
For food supply, he said the increase in COVID cases heading into wintry weather, combined with Thanksgiving shopping boosted sales volume, but called it “slight.”
“I don’t think you’re going to see the same kind of ‘I need to fill my entire freezer and pantry with food’ this time around. I feel really good about the general state of the supply chain. We are going to have plenty of food.”
Albertsons and Wall Street
In June, Albertsons launched an initial public offering, taking the company public again after a long, winding road.
The stock quickly slipped below the initial $16 price, hitting a low of $13.06 in September. The retailer posted strong quarterly results, and the stock has nearly climbed back to the initial June level.
Sankaran said his message to investors is simple: they will keep working to drive results.
“There’s only one thing I know that I can do in the long run, and that’s deliver performance. We tell the Street what we are going to deliver on, and deliver on it on a consistent basis.”
He said he thinks recent company performance will continue.
“We had a good strong Q1, another strong quarter two. We will keep delivering great numbers so that (investors) realize that we are not only performing better but that we are winning in the marketplace. We’re gaining share, and that we can consistently gain share because we’re doing things better, and have a better solution for that customer.”
He said to do that, they have to deliver for the customer as well.
“We are an exciting place to shop,” he said. “Our produce, our meats, our bakeries – they are exciting. But we want to also be really easy. We want to make sure we don’t lose that excitement but still keep it really easy for you as a customer.”
Technology – and Amazon
Yesterday, Amazon, Inc. announced it would begin offering nationwide pharmaceutical delivery as part of its Prime program. Several pureplay pharmacy stocks like Rite Aid and Walgreens say quick declines on Wall Street. Albertsons stock ended yesterday in positive territory.
“(Amazon is) a formidable competitor, but competition makes everyone better. Think about our pharmacy business. There are some nuances and differences that insulate somebody like us. Our biggest pharmacy customers are also important customers in our store. They shop both together. You can see them consolidating that in a trip.”
He also said that relationships and physical stores are key advantages.
“Many (customers) know and trust the pharmacist that’s behind the counter. And… there’s a physical aspect to our pharmacy. You can go there today and get a flu shot, a shingles shot – and when the (COVID) vaccines are released, you’ll be able to go there and get a vaccine.”
Sankaran said Albertsons is offering prescription delivery at about 600 of its stores, with plans for more.
“We too have that delivery – two hours, same day. We too have all those capabilities and we are building those capabilities.”
(Not so) undercover boss
Company founder Joe Albertson was known for taking the company’s 1970s and 80s jingle “It’s Joe Albertson’s supermarket…” to heart. He often spent time strolling the aisles of his stores talking to employees and customers before his death in 1993.
Several times during our conversation, Sankaran shared anecdotes from time spent in the market.
“I think there is no reality in our business like being in the store,” he said. “I go there because I want to talk to folks and understand what they are going through: are the technologies working, do they have enough product, where are they seeing shortages.”
He said he sometimes works in the stores as well. Working in the deli gives him a sense of what employees are seeing.
“For the first hour, I’m CEO. After an hour I’m actually slowing them down! I get slapped on the wrist, ‘come on, make that faster!’ It’s great. Then they tell me really what’s on their mind. They tell me and I come back and my team loves it or hates it, but I have seven things to act on – and I love that part of it.”
You can listen to the podcast to hear more from Sankaran, including what the most surprising thing about Boise has been, and what challenges and opportunities he sees ahead for the company.
The twists and turns of Albertsons
Albertsons’ history gets a bit complicated at times. Joe Albertson founded the chain in Boise in 1939 – and it slowly, steadily grew over the years. In 1999, the company bought Utah-based American Stores and for a time grew to the largest grocer in the nation.
In 2001, Larry Johnston took over as CEO and Chairman. After five tumultuous years, the company sold itself off in 2006. Standalone drugstores went to CVS and rebranded. The bulk of the grocery stores, 1,124, including those in Idaho, were sold to Supervalu. A new company was formed to take over 661 so-called “underperforming” Albertsons stores, led by a consortium of investors led by Cerberus Capital. The Cerberus stores were based in Boise – despite not owning the locations here.
In 2013, after Supervalu struggled with the stores it bought, it sold them to the Cerberus-led company – reassembling the bulk of the grocery company. Headquarters for the company remained in Boise – and now included oversight of the Boise-area stores.
In 2014, Albertsons purchased Safeway – and in the years since worked to transition to many of Safeway’s back office functionality.