Own brands drive record Q1 for Albertsons
By Dan Ochwat - 07/27/2020
Albertsons’ O Organics and Open Nature store brands grew faster than its overall business in the first quarter, according to the retailer’s earnings call on July 27. The retailer also said it has more in store for its own brands, noting a goal to reach 30% market penetration for own brands in the years ahead.
Albertsons’ first quarter as a public company proved to be “a record quarter by all measures,” per Vivek Sankaran, president and CEO, during the Q1 earnings call presentation.
A whopping 276% increase in digital sales in the 16 weeks ended June 20 certainly stood out, as Sankaran called it a “supercharged” digital focus, to go along with same-store sales up 26.5%, a major driver of its overall sales and other revenue reaching $22.8 billion, up 21.4% compared to the 16 weeks ended June 15, 2019.
This portfolio includes nine brands, over 12,000 products and was a $13 billion business in 2019.
Vivek Sankaran , Albertsons CEO
However, special notice was made on Albertsons’ own brands during the call.
“We are constantly focused on innovation and continuing to grow our own brands portfolio, which is another advantage for us,” Sankaran said. “This portfolio includes nine brands, over 12,000 products and was a $13 billion business in 2019, growing faster than our branded business and on average contributes a 1,000-basis point advantage in gross margin versus national brands.”
He said own brands have been growing steadily as a part of its overall sales growth in recent years and the plan is to extend own brand penetration from 25.4% in 2019 to 30% in the next few years.
In Q1, Albertsons introduced more than 400 new items in own brands, and Sankaran called out the latest ice cream flavors that include big, innovative flavors, but also a range of non-dairy, plant-based flavors. Sankaran said the company sees more growth in plant-based products and will continue to grow in the category.
Two own brands that fit that bill are O Organics and Open Nature, who Sankaran said grew faster than Albertsons overall business in the quarter in sales, seeing a 31% and 28% increase, respectively.
The own brands in the meat category also helped drive sales in fresh offerings, seeing record sales in hot dogs and pork ribs in the quarter.
Also of note, Albertsons saw an increase in its loyalty rewards program, expanding loyal members by 27% in the first quarter to 22.5 million members. It’s a key part of the omnichannel experience for Albertsons, Sankaran said. Loyalty members spend three times more than non-members.
The retailer remodeled 46 stores in the quarter, continuing to focus on its stores.