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When Joe Albertson founded his eponymous grocery store in 1939 in Boise, Idaho, he could scarcely have imagined the vast empire that would eventually grow from that humble 10,000 square foot shop.
Yet through business acumen and innovation, Albertson rapidly transformed his store into a regional success story.
By 1941, Albertsons boasted three stores doing over $1 million in sales, an impressive achievement in any era but particularly notable in the midst of recovery from the Great Depression.
After incorporating Albertsons as a corporation in 1945, Albertson assumed the title of President as he looked to further expansion.
His major success was recognizing the coming rise of the supermarket format, much larger than traditional neighborhood grocery stores.
This prescience allowed Albertsons to rapidly grow over the postwar boom years, with sales approaching $3 million from six stores by 1946.
Albertson also ventured into vertically integrated businesses like poultry production and ice cream manufacturing to supply his stores.
Joe Albertson was a pioneering figure who understood the changing economics of the grocery industry and shifted his company towards volume sales and self-sufficiency in goods.
Of course no executive is flawless, and Albertson likely made missteps in acquisitions and estimating market directions over his long tenure.
But by taking Albertsons public in 1959 and establishing a strong financial and geographic base, Joe Albertson’s choices were overall extremely successful, as the subsequent growth of Albertsons after his departure in the 1970s demonstrated.
Though Albertsons has changed ownership several times, Joe Albertson should unquestionably receive credit as the founder of one of America’s grocery leaders.
After nearly four decades guiding Albertsons from its modest beginnings, Joe Albertson stepped away from day-to-day operations in the mid-1970s.
Replacing Albertson was Warren McCain, the ambitious new Chairman and CEO whose stewardship ushered Albertsons into a new era beginning in 1976.
McCain sought to put his own stamp on the firm through initiatives like a new visual brand identity, including the now classic "Man in Gold" supermarket manager uniforms.
McCain's greatest success lay in aggressively pursuing geographic expansion for Albertsons, moving beyond the chain's familiar Intermountain West roots.
Under McCain, Albertsons penetrated major new markets like Dallas, Houston, and Chicago through acquisitions of regional chains like Skaggs and Jewel.
By the end of the 1970s, Albertsons had transformed into a national player in the cutthroat grocery segment. Alongside this external growth, McCain also maintained Albertsons' industry-leading profitability throughout his tenure.
However, McCain's pursuit of market share above all else likely caused issues in fully integrating some acquired chains, hurting the customer experience.
Additionally, major expansion inevitably came alongside increased infrastructure and financing costs to support far-flung stores.
McCain also perhaps too swiftly pursued diversification into non-food categories better left to specialized retailers.
Nevertheless, by the time Warren McCain retired in 1991 after 15 years atop Albertsons, he left a vastly larger business than the one bequeathed to him.
Though his successor would soon sell or close some outlying stores, McCain deserves immense credit for his boldness in not letting Albertsons stand still.
When Warren McCain retired in 1991, his shoes were filled by Gary G. Michael—a logical choice given Michael's long history with Albertsons.
Yet Michael took the reins during a period of immense change and uncertainty in the grocery world, as waves of consolidation and new big-box competition threatened aging regional chains.
Facing these industry headwinds, Michael chose to double down on growth rather than retrench.
He aggressively acquired the Michigan-based Seessel's chain and attempted an ambitious push into markets as far flung as Georgia and Iowa. Michael also began Albertsons' venture into proprietary premium and organic brands to lock in customer loyalty.
However, both the pace of geographic expansion and distraction into non-core private label initiatives seemed to exceed Albertsons' ability to properly integrate acquisitions during Michael’s tenure.
Many stores were left struggling with subpar systems and supply chains. Michael also perhaps underestimated the growing danger from the likes of Walmart, which heavily pressured Albertsons with discounted grocery pricing.
With the advantage of hindsight, Gary G. Michael was overly optimistic about Albertsons’ ability to hungry acquire market share when defensive moves may have been more prudent during a radically changing environment in the 1990s retail grocery space.
Though Albertsons reached its greatest physical extent under Michael’s leadership, lingering problems of efficiency and localization likely played a role in Albertsons’ faltering finances and forced sales to strengthen the company soon after Michael ceded power in 2001.
When Larry Johnston assumed Albertsons' CEO reins in 2001, the company was struggling from 1990s overexpansion and competitive threats that left many acquired assets underperforming.
Though sales volume and store count remained high, profitability suffered greatly. Johnston took charge amidst Albertsons facing a true existential crisis.
Johnston's response was swift and dramatic surgery, making difficult decisions to stabilize Albertson's finances and refocus on core markets.
In his first year atop Albertsons, Johnston announced the impending closure or sale of nearly 200 stores, as well as distribution centers and drug store assets deemed too costly or distracting.
He returned much of Albertsons to its roots in California and the Mountain West, while exiting places as close as Texas and far away as New England.
Though such aggressive restructuring alienated employees and communities relying on shuttered Albertsons, Johnston put firm finances as a priority over sentimentality or his own legacy.
The leaner Albertsons that emerged under Johnston's early tenure stemmed the bleeding from previous leadership regimes and poor systems integration following decades of acquisitions.
By making Albertsons a smaller but more secure firm, Johnston likely extended its lifespan for many years, as evinced by Albertsons buying back many discarded assets after his departure.
In his forceful renewal of focus on sustainable operations over arbitrary growth goals, along with facing reality about past managerial mistakes, Lawrence R. Johnston made difficult “bad cop” choices others avoided.
This thankless role left him unpopular but may have saved Albertsons from collapse—exactly the decisive actions needed given the dire situation Albertsons found itself in by 2001. The chain's present position owes greatly to Johnston's stern stewardship.
After over a decade of ownership shuffling and strategy changes, Albertsons finally regained stability under private equity by the late 2010s.
When CEO Vivek Sankaran took charge in 2019, he inherited a firm of renewed focus on retail grocery and pharmacy operations. This offered Sankaran the flexibility to guide Albertsons towards whichever direction seemed most promising in a rapidly evolving landscape.
Thus far, Sankaran has pursued aggressive expansion of Albertsons’ footprint through several notable acquisitions, integrating A&P and Safeway’s eastern branches along with upscale banners like Balducci’s.
He has also made investments in high-growth spaces like external meal delivery and e-commerce pickups. Seeking diversified revenue streams, Sankaran recently and controversially agreed to sell Albertsons itself to Kroger for $25 billion.
While allowing Albertsons’ absorption by a grocery titan carries risks if federal regulators intervene, Sankaran’s moves indicate a willingness to make bold bets rather than taking an overly cautious approach.
He has embraced uncertainty and fluidity instead of clinging to legacy assets. And his initiatives have delivered improved performance, with Albertsons’ 2020 sales growth outpacing competitors.
Of course, the long-term results of choices made under Sankaran’s leadership remain unclear. An unsuccessful merger could lead to massive lost value for Albertsons shareholders.
But Vivek Sankaran presently retains the benefit of the doubt that his forward-looking strategy is correct for Albertsons’ next era in an evolving grocery arena.
His mix of expansionism and Evolution has at minimum returned an entrepreneurial daring often lacking in mature companies.
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