Aftermath Of A Failed Deal: Albertsons Begins Layoffs In Boise, At Divisions

Under sworn testimony during a federal trial in Portland, OR in September, Albertsons CEO Vivek Sankaran said he would have to consider job cuts, closures and abandoning some markets if his company’s merger with Kroger failed.

You know where this story is headed, with “round 1” (layoffs) recently announced by the chain both at headquarters and its divisions.

We’re told that several hundred associates will be riffed in Boise and as many as two dozen more could lose their jobs in each of Albertsons’ 14 operating divisions nationally.

Two sources explained that a significant chunk of the job losses are in center store procurement where Albertsons is utilizing the services of Tata Consultancy Services (TCS), based in Mumbai, India. TCS, according to its website “partners with over 400 global retailers, driving their growth and transformation journeys. We are helping them achieve their goals by being data-led and leveraging new-age technologies with (its proprietary) TCS Algo Retail. TCS Algo Retail unlocks exponential business value by harnessing our deep industry expertise, unique business outcome-driven engagement model, investments in AI-powered products and platforms, AI talent, innovation hubs, and partnership ecosystems.”

That’s obviously a significantly less expensive process than keeping live talent employed in Boise or in its divisions. We were told that Albertsons had been working with TCS prior to the merger announcement in October 2022, and after the deal collapsed ramped up its effort to utilize the company’s offshore services.

At the divisional level at the company’s Mid-Atlantic division based in Malvern, PA, several sources said that the numbers of administrative jobs impacted was in the “low 20 range.” We’re told that about half of those positions are in the merchandising/procurement arena, while the others will affect store operations, including the consolidation of one operating district and the elimination of several operations specialists supervising activities in Acme and Safeway stores that feature a Starbucks. That job will now be handled by the division’s deli specialists.

A week before the riffing was confirmed, Sankaran acknowledged during his conference call with financial analysts following the chain’s Q3 earnings release, that the company would cut spending by $1.5 billion over the next three years.

And a few days before the job cutbacks were announced, Omer Gajial, Albertsons’ EVP-chief merchandising and digital officer, announced in a letter to its “valued partners” that “… we start this next chapter in strong financial condition with a track record of positive business performance. We have a compelling pipeline of productivity to fund growth investments, and we are excited to build on this foundation and become even more effective and efficient as a company as we begin our next chapter. Learn more about our Strategic Framework. We look forward to providing further information about our strategy for 2025 and beyond in the weeks and months ahead. Importantly, we are ready to accelerate growth in 2025. We look forward to your continued partnership, in collectively delivering growth and value to our customers. We look forward to your ideas to lower cost, introduce early and exciting items, support Omnichannel growth, and increase brand reach through Albertsons Media Collective. On behalf of Albertsons Companies, I’d like to reiterate that we remain committed to your business and value our ongoing relationship. Thank you for your partnership, and we look forward to a prosperous and exciting year ahead!”

No mention was made of forthcoming job losses. BTW, Gajial is another former PepsiCo executive that Sankaran brought over after he was named Albertsons chief executive in 2019. He was promoted to chief merchant last April, replacing Jennifer Saenz (who now oversees pharmacy and ecommerce), another PepsiCo alumnus. If you question Gajial’s experience and acumen as a grocery merchant, you wouldn’t be alone.

I’m not predicting that Albertsons will go scorched earth with its future “efficiency” decision making. But the prospect of further job cuts, store closings and (as Sankaran indicated) abandoning some markets seem like outcomes that are much more likely than only two months ago.

Because, beyond the short-term sales and earnings results, if Albertsons doesn’t significantly upgrade its “holy trinity” of huge challenges – enhancing store conditions, lowering everyday prices and improving associate morale, particularly in the stores – the company will feel the isolation of being the last retailer off the island.

As for Sankaran himself, I can’t see the former PepsiCo executive being part of the long-term solution. Sankaran’s corporate skills might have once been an asset in dealing with the financial markets, but not anymore. He’s not a merchant or an operator, so what can he possibly bring to the party now? And with his potential $43 million “parachute” package now a fleeting fantasy, what’s his motivation to stay? But these issues aren’t completely on Sankaran’s shoulders; you can blame the greed and stinginess of the company’s hedge fund and institutional investors who dominate and influence Albertsons board (stingy – except when it comes to their own pockets). While it may be noble for a company like Cerberus Capital Management to have stuck by their 2006 investment, they, along with other institutional holders, have taken billions out of Albertsons with very little to demonstrate to the trade or its consumers that there is a compelling reason (other than convenience) to make the company’s banners the first stop on their shopping tour.

We’ll see how this plays out, but a year from now I’ll likely be writing about a lot more changes.

‘Round The Trade

Wegmans continues to stretch its geographic map, announcing earlier this month that it will open its first uber-store in the Pittsburgh area. Specifically, Cranberry Township, a favorable demographic area located about 20 miles north of the Steel City. The new store will be 115,000 square feet in size (one of the largest Wegmans in recent memory) and sit on 13 acres of land adjacent to the UPMC campus. No timetable for the opening has yet been announced, but this is looking like a 2027 or even a 2028 debut. The Cranberry Township store will be the Rochester, NY-based regional chain’s most western location. Its farthest southern location in Charlotte, NC (110,000 square feet) should open next summer. Slated to open sooner – February 26 – is the new 101,000 square foot Wegmans in Lake Grove, NY, the merchant’s first Long Island store. In June, the retailer will cut the ribbon on an 80,000 square foot store in upscale Rockville, MD; and later this year, Wegmans will make its Connecticut debut when it opens a 92,000 square footer in tony Norwalk, CT.

John McCaffrey has been promoted to senior VP-operations for Tops Friendly markets where he will oversee all store ops for the Williamsville, NY-based 152 store regional chain. McCaffrey replaces Mike Patti who will retire from Tops after 52 years of service. McCaffrey joined Tops in 2010 after it purchased most of the assets of P&C supermarkets/Penn Traffic. He’ll report directly to Tops’ president Ron Ferri.

Local Notes

Just before presstime, we learned of the death of Bob Uecker, who parlayed a career of bad catching and outstanding broadcasting into national fame. As a Major League catcher for six seasons, Uecker was, quite frankly, awful. He combined bad hitting (.200 lifetime batting average) and poor defense (in 1967, his last season, Uecker led National League catchers with 11 errors and 27 passed balls with the Atlanta Braves despite playing in fewer than half of their games). In fact, 1967, was the year that his comedic genius was first publicly discovered. Many of those passed balls occurred catching for Hall of Fame knuckleball pitcher Phil Niekro. After a particularly bad game catching Niekro, a reporter asked him the best way to handle a knuckleball. “Just wait until it stops rolling, then go to the backstop and pick it up,” ‘Ueck’ said. Shortly after his active career as a player, ended, Bud Selig, then the Milwaukee Brewers owner (and later baseball commissioner) offered Uecker a job as a scout in his hometown. According to Selig, Uecker was the “worst scout in the history of baseball. I once received a scouting report that was smeared with mashed potatoes and gravy.” But Selig still held out hope for Uecker as an announcer. And what a great announcer he was for 53 years. Combining deft communications skills, a deep seated knowledge of the game and hilarious stories, Uecker soon became a popular national figure. He appeared on “The Tonight Show” with Johnny Carson more than 100 times and was the star of his own TV series – “Mr. Belvedere” which ran for five seasons (1985-1990). In 1989, his iconic role as announcer Harry Doyle in the hilarious movie “Major League” cemented his image as a great comic actor (“Just a bit outside,” in describing a pitch four feet wide thrown by control-challenged pitcher and former ex-convict Ricky “Wild Thing” Vaughn, played by Charlie Sheen). In 2003, Uecker was inducted into the Baseball Hall of Fame in Cooperstown, NY for his broadcasting skills. If you want to laugh out loud for 15 minutes, watch the ceremony on YouTube. A life very well lived, Bob Uecker was 90 when he passed.