Food inflation ‘manageable’, the supply chain has ‘nothing’ like the early stages of COVID-19


Albertsons (ACI) customers can expect higher prices and ‘uneven’ food availability, CEO Vivek Sankaran told Yahoo Finance on Monday, but insisted the effects are not disastrous for buyers or the food chain.

The grocer released a second quarter 2021 earnings report that beat Wall Street expectations, thanks to a 5% increase in digital sales, and raised its guidance for fiscal 2021.

Even with an economy rocked by soaring prices, bottlenecks everywhere and a shortage of workers, Albertsons – which has 2,278 stores and serves more than 33 million customers across the country – has seen its sales in stores. comparables increase 1.5% this quarter.

Meanwhile, web sales growth – an effect that has benefited competitors like Walmart (WMT) and Amazon (AMZN) Whole Foods – has climbed 248% over the past two years, bolstered by trends in the pandemic era which should not retreat any time soon. Shares of the company are up 62% year-to-date and 100% from a year ago.

As industries around the world face major supply chain shortages, Sankaran has made it clear that the current shortages are “nothing we saw at the start of the pandemic.” With some stores struggling with empty shelves, Sankaran said consumers can expect the impact on food to be “uneven,” but not a chronic problem.

“You don’t have to worry [when] we can’t get the food and can’t get the items we want… the availability is spotty, ”the CEO told Yahoo Finance.

He added that the company offers its customers suitable alternatives when they enter a specific store.

“You might not find exactly what you want, but you will find something else,” he said. “Next week you might get exactly what you want, because a lot of the products are in allocation.”

In order to avoid any potential craze ahead of the holiday months, Sankaran said Albertsons is already preparing for the Thanksgiving holiday so that customers will feel “ready” and “comfortable for the product to arrive” before the holidays. .

“This is especially true as Thanksgiving approaches, the other thing we do is make sure we can get the produce out as soon as we get it, so the turkeys are already on the shelves,” the executive added. .

Sankaran says items facing the greatest number of shortages include items like sports drinks, soft drinks, some laundry and cleaning products, and – “every now and then” – key proteins.

Shortages add to growing concerns about inflation, which hit consumers just before the holidays

Sankaran said the price hike is not yet completely shutting down consumers. On the contrary, food inflation is “still manageable for the consumer and manageable for companies like ours, from a gross margin and overall profitability perspective” – ​​and is expected to remain so. In the coming months.

He added that there has been “no fundamental change in consumer behavior about what they buy,” but the company is able to manage any impact by providing consumers with various choices.

Albertsons store in Buellton, California

For Albertsons, the focus on transformation is key, especially in how it works digitally. Sankaran expects “continuously growing” customers to buy online.

“Our omnichannel strategy is built around our stores … people who are comfortable with the quality and assortment that they have seen in the store now know that it is the same assortment,” said he explained. “It creates this virtuous circle where people go now, they can go to the store when they want to do a new store or want to have that experience.”

And it pays off, the bill for these omnichannel customers is actually three times that of the traditional customer, he noted.

“When people do both, they just spend more with us… we get somebody else’s market share because they don’t eat more,” added the CEO. “I think there’s a lot of headroom as we get better and more used to consumers to operate both digitally and in-store.”

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at [email protected]

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