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With a plummeting share price among its incentives, Albertsons Cos grocery empire has undertaken a restructuring that under the rubric ACI Edge is consolidating multiple-banner operator from 11 divisions into 4 broader regions to “help us better leverage our scale, simplify how we operate and invest more time and resources in serving our customers and communities,” per memo sent out to trade partners. “At same time,” Boise, Idaho-based retailer said, “we are creating more capacity for markets and regions to focus on what customers notice most: fresh quality, local assortment and local relevance.” Move involves several exec reshufflings, including naming of Jack Pestello prexy for fresh & own brands merchandising, while Chris Lanoue takes on role as prexy for center store merchandising, per memo carrying signature of Michelle Larson, evp, chief merchandising officer and digital officer at co, whose 2,200 stores straddle 22 banners from Safeway to Tom Thumb. Some who represent bev brands were skeptical the new structure will help attain those goals. “They are basically consolidating all of the chains to one buying unit,” observed Bill Sipper of Cascadia Managing Brands in NJ. “It flies against what other chains like Whole Foods, HEB, even Walmart to an extent, are doing. They are all looking to make top decisions at corporate but still allow some local decisions at the local level.” Overall, he likes doing biz with Albertsons, saying it’s easy to work with, fair on slotting and open to looking at new products, but he’s not sure this is right move to make.For its part, Albertsons believes it can thread that needle thanks to AI-assisted improvements in “making stronger category decisions, assortment decisions, price and promotion decisions from a center store perspective, across the entire company,” as CEO Susan Morris told investors yesterday on fiscal Q1 earnings call. The new data and tools allow Albertsons team “to be very surgical at the local market level, but being able to do so from the center.” Effort is underway, targeting completion by next spring or summer.AI will play a growing role in merchandising activities. It’s being deployed “to improve category planning, promotions, vendor collaboration and margin management,” with early pilots yielding results that are encouraging enough to expand capabilities “into broader planning processes with selected vendor partners,” Morris reported.Announcement was made yesterday as Albertsons reported soft grocery sales despite riding price increases in continued inflationary environment. Same-store sales edged down 0.8% as lower-income shoppers pulled back. The Q2 performance sent shares skidding to lowest level since co IPO’ed in 2020. Along the way, of course, its attempted merger with rival Kroger fizzled in wake of regulatory concerns. Speaking to investors, CEO Morris termed results disappointing enough to warrant “decisive action.” She’s hoping ACI Edge offers “the economics and capabilities of a national retailer, combined with the relevance and customer connection of a local grocer” while saving $200 mil in annual operating costs by next year. Still, as she said later, “productivity is an important part of this work, but it's not the end goal.”‘We Push Back’ on Supplier Price Hikes With a substantial private-label biz, Albertsons has inside view on input costs its suppliers are confronting, providing insights it will use to combat their pushes for further price increases later this year. “Our first response is always pushing back,” Morris asserted. “We are also manufacturers. We understand where cost increases are coming from, whether it's fuel, packaging and so forth. We push back. And then a negotiation begins . . . We're going to be pushing our vendor partners very hard to absorb those costs on their own.” If that’s an annual ritual, it may be intensified this go-round now that Albertsons’ back is to the wall. “We're being very clear today with our goals on rightsizing our value proposition,” Morris emphasized. “We're being clearer than we've ever been before with our manufacturing and vendor partners on the centralization of center store, we expect them to lean in.”Rethinking Bev Sets Expect a big rethink of bevs assortment with functional entries likely to get more space. Citing her 41 yrs in the biz, CEO Morris observed, “As I look across the store, in many retailers, we have certain set sizes or space allocations or adjacencies that have been the same for decades. The customer has changed, and we've been implementing what we call macro resets in key markets across the company with great success.” Turning to bev aisle, she added: “Think about functional beverage. Where does protein belong in the store when you think about all the supplements and the enhanced beverages and those kinds of things? Our macro resets are leveraging the way that our customers are shopping today and how they're shopping tomorrow, rightsizing space, creating more logical adjacencies and amplifying holding power on the categories where we see the most growth.” (In writing this story we relied in part on Motley Fool transcript.)

RETAIL: As Grocery Sales Weaken, Albertsons Sets Sweeping Reorg Dubbed ACI Edge; Revamping Bev Sets as Trends Shift

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