AI and grocery - US giant Albertsons gets personal in its digital intent

Susan Morris, CEO at US retail giant Albertsons is a woman with a conviction that shapes the firm’s strategic thinking:

The future of grocery is personal, and true personalization is a durable competitive advantage.

To that end, Morris articulates the firm’s mission as being to become the most-loved grocer in the neighborhoods it serves by transforming routine transactions into differentiated customer connections and experiences that deepen engagement. That’s made possible by having a store network that boasts outlets within 15 minutes of approximately 120 million people. She explains:

Put simply, our store network cannot be replicated and is further strengthened by our team, our data, AI and next-generation technology capabilities, which allow us to personalize a customer's entire experience....In our stores, we provide market tailored fresh offerings and value-enhancing services. In e-commerce, we offer speed, convenience and variety from our store-based fulfillment model....And we have a strong loyalty engagement where deep relationships with our banners and brands provide us the data and insights to personalized experiences at scale.

Scalable

To elevate customer experience, Albertsons aims to create “scalable yet personal experiences”, she says, experiences that are differentiated, combine “caring service, quality and fresh, convenience, value and own brands”, all while remaining simple and easy for customers to navigate.

At the heart of all this is a drive to support and enhance the personal digital and loyalty relationship, connecting online and in-store experiences so customers feel recognized, seen and valued wherever they engage with the brand, says Morris:

The outcome we're driving here is simple - customers don't just shop with us, they choose us. We're very clear-eyed about today's consumer. They remain focused on value, making a balanced value proposition more critical than ever. Our approach to this is deliberate and sustainable. Scale is a real advantage that we will leverage every day, including capitalizing on buying better together at the national level, expanding our own brand penetration, and growing our retail media platform, all to provide fuel to re-invest in value.

Of course, AI plays a large part in this thinking. Morris states:

At the same time, we're accelerating automation and AI-enabled tools across merchandising stores and supply chain to improve efficiency to add further fuel for investment...Underpinning all of this is our team powered data-driven and AI-enabled company, using technology not to replace the human element, but to amplify it. 

In fact, overall, technology and AI fit at the center of Albertson’s strategy, she argues, citing four “big bets” - digital customer experience, merchandising intelligence, labor optimization and supply chain optimization. These are not pilot programs she emphasizes, they’re all long-term structural initiatives designed to drive growth and expand margins.

And she can see  tangible progress:

In digital customer experience, AI-driven capabilities are modernizing the way customers shop, delivering personalization that drives higher conversion, larger baskets and greater loyalty. [In] merchandising intelligence, automated insights and intelligent pricing tools are improving category decision-making and supporting structurally stronger margins. We are in flight with tools that are reimagining price and promotional strategy as well as category management and assortment decisions.Labor optimization, our generative AI scheduling tools will improve forecast accuracy, reducing complexity for associates and driving labor efficiency. In supply chain, our AI power demand forecasting and computer vision are improving availability, quality and freshness, while lowering inventory and fulfillment costs.

As part of the investments in supply chain, the firm has launched Gateway, a proprietary AI-powered tool that boosts inventory efficiency and replenishment for promotional center store SKUs.

She goes on:

All of these initiatives are building the modern technology-enabled Albertsons that will define our competitiveness in fiscal 2026 and beyond. Our digital and e-commerce business continues to be a strong growth engine, building on the momentum that we delivered throughout fiscal '25, digital penetration surpassed 10% in Q4, a new milestone for our omni-channel ecosystem.

Our first-party business continues to scale rapidly and contributed nearly 90% of our 16% digital growth this quarter as we continue to elevate our customer experience. Our AI-enabled shopping assistance, already showing meaningful lift in basket size, continues to enhance personalization, and we see significant runway ahead as customer adoption increases.

And that store network cited earlier pays off in other ways, she notes:

The strength of our store-based fulfillment model also continues to differentiate. Our proximity advantage enables speed and efficiency at scale as we continue to fulfill more than half of digital orders in under 3 hours. Additionally, the vast majority of delivery households are eligible for a 30-minute flash delivery, which is our fastest growing digital segment.

Loyalty

Meanwhile there’s a focus on customer loyalty initiatives. Morris says:

Our loyalty ecosystem continues to be one of our strongest competitive advantages, creating deeper stickiness and fueling our strategy. Membership grew 12% to more than 51 million members, with more frequent transactions, easier reward redemption and higher spending among engaged households. The program's momentum reflects both simplicity and relevancy. Customers are gravitating toward immediate value, including increasing redemption through the cash off option, which is clear evidence that we're meeting their needs in a value-focused environment.

Loyalty is also a flywheel for growth. It enriches our data, strengthens our media collective and helps us personalize promotions with increasing precision. Across the board, loyalty is driving higher lifetime value, deeper omnichannel engagement and a more predictable, resilient revenue base, all essential components of our long-term growth algorithm.

Overall, Morris concludes:

The environment remains dynamic and competitive intensity across food retail is not easing, but our strategy is built for this reality. We have a defensible footprint that creates everyday convenience, distinct fresh experiences, a differentiated digital and loyalty ecosystem that deepens engagement and lifetime value of pharmacy business with long-term earnings power and an AI-enabled operating model that strengthens margins, improves execution and compounds returns over time.

My take

Life after the collapse of the planned merger with Kroger continues apace - and seems to be paying off nicely.