Why it matters:
- COVID-19 triggered a surge in online spending, with Americans purchasing $1.7 trillion online during the two years of the pandemic—almost double what they spent online in 2018 and 2019 combined—according to the Adobe Digital Economy Index.
- Grocery stores saw the biggest addition of new online shoppers, Adobe reported, with monthly online grocery spending more than doubling to an average of $6.7 billion each month.
- Albertsons Companies, which operates over 2,200 supermarkets in 34 states, had to respond quickly to meet a 263% jump in digital sales from fiscal 2019 to fiscal 2021.
Albertsons Companies Inc., North America’s second largest supermarket operator after Kroger, had just begun an upgrade of its e-commerce and digital capabilities when the pandemic hit in early 2020.
The strategies Albertsons used for its digital transformation offer lessons for businesses large and small looking to make a digital leap.
Albertsons operates 2,276 supermarkets in 34 states under 24 different banners, including Albertsons, Safeway, Acme, Shaw’s, and Tom Thumb. It generated sales of $71.8 billion in fiscal 2021, and its digital sales jumped 263% during the two years of the pandemic.
Supermarket chains under the Albertsons umbrella had been offering e-commerce for many years before the pandemic, but the company wanted to take its digital presence to the next level. The goal of the planned transformation was “to go much broader, and modernize some of the old aspects of the technologies that had been launched,” Chris Rupp, Chief Customer and Digital Officer at Albertsons, told CO—.
Pre-pandemic, “we already knew there were so many things we could do for customers to make shopping more convenient and easier,” Rupp said.
“The pandemic only served to expedite our efforts because so many people demanded e-commerce to shop from the safety of their home,” she said.
The pandemic only served to expedite our efforts because so many people demanded e-commerce to shop from the safety of their home.
Chris Rupp, Chief Customer and Digital Officer, Albertsons
The online grocery shopping boom: ‘Speed and convenience are becoming just as important as cost savings’
The amount Americans spend online each month for groceries more than doubled during the pandemic, and grocery shopping is reshaping e-commerce, said Patrick Brown, vice president of growth marketing and insights at Adobe, in a March report. The spike in online grocery sales, Brown said, reflects “a shift in the digital economy, where speed and convenience are becoming just as important as cost savings.”
Rupp, who spent 10 years at Amazon before joining Albertsons in late 2019, was brought on to lead its digital transformation.
She shared with CO— the strategies Albertsons used while tackling its digital makeover, and the lessons learned.
[Read: The Tech Innovations Set to Take Off in 2022 Aimed at Pandemic-Changed Shoppers]
Delivering three online must-haves: ‘lovable product,’ fast shipping, and ‘differentiated experiences’
When beginning the digital transformation, Rupp and her team thought about all the things they could do for customers and divided them into three different “buckets.”
The first category was “minimal lovable product.” That means, Rupp said, the features which “if you can’t, at a minimum, do these very simple things why would customers ever shop with you?”
“It’s things like the app has to be up and running 24/7, you can’t have any outages,” she said. “You have to be shipping on time. You have to offer a meaningful selection. It doesn’t necessarily have to be the full selection in our store, but it has to be a meaningful selection.”
The second bucket was “all the things customers have come to expect,” and have seen competitors do well, such as a personalized experience that saves you time, or faster shipping speeds, Rupp said.
“The third bucket we call differentiated experiences,” she said. “It would be the reason you would come to us instead of anywhere else.”
One example of how Albertsons added differentiation, Rupp said, was its purchase of recipe and menu-planning software that it integrated with its e-commerce apps to allow shoppers to select a recipe, add all the needed ingredients to their order, and instantly create shopping lists while planning menus.
“When customers are using this experience, their basket size is going up dramatically because they’re finding everything they need for the dinner in one place and one click,” Rupp said.
To ‘build, buy, or partner’: determining the best way to upgrade tech
When adding digital capabilities, companies need to decide if it is smarter to build the app or technology themselves, buy it, or form a strategic partnership with another company.
“There are a lot of cases where buying the technology will make a lot of sense, if it’s not differentiated and just considered to be very basic,” Rupp said. “When you start thinking about what the heart of your business is and why a customer would pick you over all the other alternatives, then you would think about building your own [tech] or partnering with someone who can help you create that differentiation.”
Albertsons decided to build its own picking app, which store associates use to fill orders, “because we looked around and we couldn’t find anybody that had done it in grocery well,” Rupp said.
“We have been thankful for that decision every day since because we keep finding ways to use this in our store to make both our customers happier with our service level, and also the associates, by making their jobs easier.”
Building its own app also gave Albertsons the flexibility to test and add new features. “When you’re thinking about building [tech], knowing what flexibility you’ll need over time in that arena is really important input,” Rupp said.
The team solicited input about the app from the store workers who would be using it. “Nobody knows how to do it faster or better than the people who do it every day,” Rupp said.
The store team learned things like Wi-Fi connectivity in a large supermarket can be problematic, with places in the building where it cuts out. “So, we decided to build a capability that allows the [picking app] device to go offline and continue to process [orders], so that it doesn’t slow down the productivity of the picker,” she said.
Individual store leaders also can customize the picking path, so it reflects the local store and its merchandise.
Keeping the digital transformation going
Technology is moving so quickly that digital transformation needs to be an ongoing process for businesses, Rupp said.
Partnerships with technology providers are one of the ways companies can learn about new technologies as they become available.
“Finding ways to stay on top of what new technologies are coming out, through partnerships with software providers, [is] important for just knowing what is possible,” she said.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Follow us on Instagram for more expert tips & business owners’ stories.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
CO— Exclusives: Insider Strategies
How the buzziest brands and hottest startups are solving today's biggest business challenges. CO— brings you advice from startup founders and top executives for thriving in a new world.
