However, Albertsons’ CEO Vivek Sankaran warned additional increases will be considered “on a case by case basis” as long as they stay within a “reasonable range” of under 3% to 4%.
“I know that some of our CPG companies are facing challenges in labor, challenges in transportation, etc. We have a large own-brands business, and because of that we get tremendous transparency into what is happening to cost. So, we end up having good and constructive negotiations with our supplier partners, and where warranted and legitimate, we will pass it through,” Sankaran told investment analysts during the retailer’s fiscal 2021 first quarter earnings call July 29.
He explained that as long as inflationary price increases continue to be under the 3% to 4% range, they can “actually be good for business – especially with a strong consumer” because “we get a lot of leverage when it gets not that range.”
So far product cost inflation has fallen far below this threshold with Albertsons CFO Bob Dimond estimating it at a “somewhat modest 1.5% to 1.7% during the quarter.” However, he was quick to point out that figure was increasing during the quarter and Sankaran said he expects it to be slightly higher towards the back half of year.
As national brands take price, Albertsons also might increase price on some of its own label products, Sankaran said. Whether it does and how much will depend in part on whether the products are “destination products,” which would allow it to be “a little more aggressive because we can compete well with national brands,” of if they are staples that help keep the stores overall daily prices within reach of consumers.