Business model of Albertsons Companies

Customer Segments

Albertsons serves a large consumer base through its various grocery and supermarket chains.  The company operates multiple brands – including United Supermarkets, Safeway, Randalls, Albertsons, Star Market, and Carrs – that target a range of consumer demographics. 

An online database of customer demographics suggests that Albertsons attracts customers from a wide spectrum of demographic groups. 

The company, however, appears to be particularly popular with customers of Hispanic or Asian descent, and with families that have a household income of more than USD 80,000 per year.  Albertsons customers typically purchase 3 or more than 10 items per visit.

Albertsons is based in the US.  The operations of its flagship Albertsons chain and of its other brands are focused on its home market of North America. 

The company and its brands do not appear to have any significant international operations.

Value Propositions

Albertsons provides value to its customers in the following ways:

• Reputation and Track Record – Albertsons is among the largest and most well-known grocery chain operators in the US, and it has an established reputation as a reliable and efficient operator that dates back almost a century;
• Multiple Brands – Albertsons controls a portfolio of grocery brands and supermarket chains in the US – including Albertsons, United Supermarkets, Safeway, Star Market, and Randalls – enabling it to attract a wide range of customers and demographics;
• Reach and Accessibility – Albertsons operates an extensive network of stores across the US, comprising more than 2,300 individual outlets, as well significant storage and distribution infrastructure, which enables the company to serve customers quickly and efficiently;
• Customer Service – Albertsons offers its customers a high level of customer service and care, helping its various brands to attract recurring business from its customers;
• Ecommerce – Albertsons operates several online shopping platform sunder its various brands, which allow customers to access grocery services and home delivery from the comfort of their own homes; and
• Product Range and Prices – Albertsons offers a wide range of products – including everyday household items – at reasonable prices, making its products accessible to a wide customer base.

Channels

Albertsons primarily sells its products to customers through its extensive network of brick and mortar stores across the US, including under the Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs Quality Centers, Haggen, United Supermarkets, Market Street, Amigos, United Express, Sav-On, Jewel-Osco, Acme, Shaw's and Star Market.  These supermarkets and grocery stores are staffed by sales personnel who serve customers directly.

In addition to its physical retail outlets, Albertsons’ brands also operate online grocery platforms, through which customers are able to browse and purchase items online, and arrange either to pick up groceries or to have them delivered to their home. 

The company also operates a meal kit company under the Plated brand, through which customers can have meal kits delivered to their homes.   

Albertsons’ sales channels are supported by extensive distribution and logistics infrastructure, including warehouses, service centres, and distribution centres.

Customer Relationships

Albertsons, across its brands and chains, seeks to secure recurring business from its customers.  The company encourages customers to return through its reasonable prices and customer service, as well as through its various rewards schemes. 

The company’s brands offer customers rewards, discounts, and benefits for being frequent customers.

Albertsons is additionally able to communicate directly with customers through the various social media accounts of its brands, including with LinkedIn, Facebook, Twitter, and YouTube.

Key Activities

Albertsons is engaged in the operation of food and drug retail stores across the US that offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. 

The company’s retail operating divisions are geographically based and are reported in one reportable segment. 

The company’s operating segments and reporting units are made up of 13 divisions.  The company operates stores under various banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs, as well as meal kit company.  Across all operating segments, the Company operates primarily one store format.

Each store offers the same general mix of products with similar pricing to similar categories of customers, have similar distribution methods, operate in similar regulatory environments and purchase merchandise from similar or the same vendors.

Key Partners

Albertsons works closely with a range of companies and organisations in the delivery of effective and efficient retail services. 

These partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, comprising suppliers of products and merchandise that are sold across the company’s various stores and brands, as well as providers of other third-party service providers that support the company’s corporate activities more broadly;
• Distribution and Logistics Partners, comprising logistics and distribution companies that support the company’s warehousing and distribution operations, ensuring that its stores are stocked quickly and efficiently;
• Community Partners, comprising various non-profit and charitable organisations, with which the company collaborates on community and social projects across the US;
• Technology Partners, including a number of technology companies that assist in developing, implementing, and maintaining the company’s ecommerce platforms and online grocery delivery services;
• Strategic Partners, comprising a range of companies with which the company collaborates on other projects, including business development, marketing, sponsorship, and other projects.

Albertsons has launched a number of partnerships in recent years.  In 2017, the company launched a partnership with Instacart to assist in the implementation of its online shopping and delivery services. 

In 2018, the company established a partnership with venture capital firm Greycroft to help grow emerging companies and technology in the grocery sector.

Key Resources

Albertsons’ business depends on its ability to provide grocery products to customers conveniently, efficiently, and at reasonable prices. 

As such, the company’s key resources are its stock and supply chain, its distribution and logistics infrastructure, its brands, its network of retail outlets, its online grocery platforms and IT infrastructure, and its personnel. 

Albertsons notably owns and or leases more than 2,300 brick and mortar retail outlets across the US. 

Cost Structure

Albertsons incurs costs in relation to the acquisition of merchandise and supplies, the procurement of third party services, the operation of its distribution and storage networks, the operation of its retail outlets – including rental and utility costs, the maintenance and development of its online platforms and IT infrastructure, the payment of salaries and benefits to its personnel, and the management of its partnerships. 

In 2017, Albertsons recorded annual cost of sales in the amount of USD 43.56 billion and selling and administrative expenses in the amount of USD 16.22 billion. 

Revenue Streams

Albertson generates revenue through the operation of grocery and supermarket chains across the US. 

The company derives its revenue primarily through the collection of sales fees from customers across its network of brick and mortar stores.  The company also derives revenue from online transactions via its various online platforms. 

In 2017, Albertsons generated annual revenue in the amount of USD 59.92 billion, up marginally on the USD 59.68 billion recorded by the company the previous year.