Can Albertsons' Massive Reorganization Save the Business? | Fast Five Shorts

Albertsons is overhauling its operations.

This is going to be a great one to talk about with you, Josh.

Is overhauling its operations through a new initiative called ACI Edge, consolidating 11 divisions into four regions while cutting its full year sales and earnings forecast after a disappointing first quarter.

According to Supermarket News, identical sales fell 0.8% in Q1 of fiscal 2026 and Albertsons now projects full year identical sales to decline by as much as 1.5%, which is down from prior guidance of up to 1% growth.

ACI Edge, which sounds much cooler than it probably is, consolidates 11 divisions into four regions, California, the West, the south and the east, and centralizes center store merchandising under a single enterprise team, targeting about $200 million in annual run rate savings by fiscal 2027 with Ruy50 million in transition costs across fiscal 26 and 27.

Four enterprise AI priorities are central to ACI Edge.

Digital customer experience, Merchandise Intelligence, labor optimization and supply chain optimization.

CEO Sean Susan Morris cited, quote, increasing pressure from softer industry unit trends and a more cautious consumer and said the sales decline was sharpest among lower income shoppers who are trading down to private label value, packaging and cheaper proteins.

Morris also pointed to Walmart, Amazon and Aldi as the retailers pulling share from Albertsons.

Albertsons shares fell more than 20%, just 20% following the announcement.

Josh, we're coming to the end of the show.

I hope you still have your energy because this is also the A and M put you on the spot question of the week.

We don't usually get this in headline number five, Josh, so hope you've had your coffee today.

Here it is.

If Albertsons is serious about reorganizing for growth, are they getting it right in terms of which functions and capabilities should be centralized and which should be more locally distributed?

Yeah, so I think you have to have some level of centralization in merchandising and buying.

So I was actually surprised when I read this because I don't, I don't know exactly how they're operating at Albertsons, but I've also never.

Yeah, but I've also never worked for, for a retailer with over 2000 stores.

I know they have a lot of stores in a lot of places, probably different and other things.

Yeah, a lot of banners.

So obviously, you know, I think it's certainly going to help their buying power.

I think it's going to create, you know, a more consistent brand experience across a lot of their stores.

But I think the risk they run in some ways is Just losing a little bit of speed to market or kind of that hyper localization that happens at, you know, through a distributed model where maybe the stores or the regions or markets have a little bit more control over assortment.

You know, I guess when you're sitting in an office in Idaho and trying to curate, you know, an assortment for a store in Louisiana, you know, I can imagine that might be, might be a challenge, but I think it's a good idea.

I've never worked anywhere that didn't have a lot of centralization from a merchandising and buying standpoint.

So I think it's a smart move.

I think it's going to, you know, if you think about how they're operating though, today, my guess is it's going to take them some time to get this right and get people to understand how to do.

Do it the new way.

Yeah, that.

Yeah, that's really interesting.

The reason I laughed, I chuggled too, is I was kind of like, yeah, I'm kind of surprised you aren't doing this already, honestly.

And I mean, damn's question.

I think, I think it's the right places to do it.

The other thing, you know, like, I was thinking about this too, is like, you know, okay, you know, Kroger kind of takes this approach to some degree, I'm guessing, you know, I hold in the Northeast probably takes this approach safely, takes this approach.

And a part of me is like, is it, Are we sitting on Moneyball here?

Like, why is this approach still being taken?

Like, you know, why isn't, why aren't Kroger stores all just Kroger stores?

You know, like, why aren't we ripping the band aid off that?

Like, is there anything that tells us that that's not the right way to go?

Or is it just old beliefs that we're holding on to, that we need all these localized stores, you know, or can you grow them into one national banner at the time?

Because all the points you're bringing up are like, yeah, but, you know, Walmart does it, you know, Target does it, you know, there's Aldi does it, you know, like, so what?

I don't, I don't get it.

And the other thing, too, that's a factor here now, Josh, which we just spent a ton of time talking about, is it's also online.

Online is the easiest.

This drives me nuts, actually.

I've had lots of battles about this over my career.

Online is the best way to personalize your store, your physical stores, like, just offer the other localized products online.

And have a vast marketplace of localized offerings.

Because you know what, you have people that are from Louisiana living in California, they want to buy Louisiana stuff.

So, like, just offer it, you know, make it happen.

And so that's the thing that, that doesn't make sense.

That's the question I have.

But the other point I bring up too, Josh, you know, which goes back to what I talked about on this show.

It's like, at the end of the day, this might be the right move for Albertsons, but I don't think it's going to matter.

Like, I think it's a bilge pump at this point.

And, you know, the reason I say that is I shared this slide on social media this week where I asked Google Gemini, Josh, I said, Google Gemini.

I said, give me a basket of five items, you know, five typical grocery basket items of the typical shopper and compare the prices at Walmart, Amazon.

And I just happened to randomly pick Albertsons, you know, before this announcement.

And, and of course, not surprisingly, the baskets are cheaper at Walmart and Amazon than they are at Albertsons to the degree of like, if I was to cherry pick the best items across Walmart and Amazon, I would save 25% versus Albertsons.

So in the age of AI and then you combine in Prime Walmart plus subscription delivery 30 minutes or less, I can get whatever I want.

How does Albertsons continue to survive in that arena in the long term with that much price transparency now at the fingertips of the consumers?

I just don't see how it works.

I'm sorry, that slide says it all to me right there.

But, Josh, you get the final word on today's show.

Well, I think you're right.

By the way, I've always wondered too, why do we have so many banners?

That just doesn't make sense to me.

I think everyone does that.

Yeah, because I'm like, it just seems like more work for everyone because you're just dealing with all these different banners that sell the same products.

But yeah, you know, I don't have a lot, a lot else to add to that topic.

I think it'll be interesting to see where they go.

But to your point around price transparency, I, like I said, I led a lot of work in consumer insights and value trumps everything right now.

And so if you can't win on price and promotion, you are not going to create any brand equity.

And so I think they're going to have to figure that out.

We, I've saw it with a bunch of other regional retailers too, and grocers which I won't name here, but they were in the same situation because their prices are just too high and they can't compete.

And so they're going to have to figure that out long term.

Quality always matters, but it matters a little less than it has traditionally because a lot of the quality you're seeing, especially with private label brands and other things, they're starting to get better and it's a little bit, there's less discrepancies between those products across retailers and so they're going to have to win in value and so go, yeah, 100%.

And then the other point too is we're crossing that threshold of 20% online penetration in grocery, which is when things really start to change.

And so that's another reason we're at, at this point of having this conversation that we've been having today.

So it's been a grocery heavy show, but I think it's been a really important grocery heavy show in terms of thinking about how the future is going to unfold.