Why AI Will Prove a Key Part of Albertsons' Turnaround Strategy
When Albertsons Cos. reported its second-quarter earnings on Tuesday, CEO Susan Morris announced the company would embark on a "comprehensive business review to speed up improvements in Albertsons' performance and tackle even harder a cost structure we can no longer afford." The grocer is preparing to deploy a turnaround strategy that will take it back to the basics of food retail in many ways.
Albertsons' net sales and other revenue fell slightly by 0.1% year over year, driven by a 0.8% decline in identical sales for the quarter. But digital sales proved to be a bright spot for the grocer, growing by 11% in Q2 2026 over the same period last year.
It's no surprise, then, that executives on Albertsons' Q2 earnings call said that technology will be an important driver behind the operational improvements that will likely be at the heart of the company's turnaround strategy. Specifically, Morris and Executive Chair Meg Whitman detailed some of the ways Albertsons will tap into AI to achieve the necessary improvements.
"We have our four AI big bets," Morris said on the call. "Each of them are actually designed to help accelerate the focus that we have now around driving improvements in store standards, improving the customer value proposition, and taking cost and complexity out of the business. It's actually incredibly complementary."
One of the "bets" Albertsons is making on AI is related to merchandise intelligence. Morris detailed that such an investment will enable faster, data-driven decisions regarding product assortment, pricing and promotional strategy across categories.
Albertsons will also look to AI to optimize labor allocation in stores, Morris said. The effort will ensure productivity gains while maintaining elevated store execution and customer service standards.
Another of the "bets" Albertsons is making on AI is using the technology to improve end-to-end supply chain planning, in an effort to enhance in-stock availability for shoppers while also lowering inventory holding costs and managing shrink, explained Morris.
"Our merch intelligence big bet is literally about enabling faster, smarter decision-making on category decisions, whether it be assortment, all the way through to price and promotion," Morris noted.
All of this comes at a time when AI is becoming a key part of many grocers' operations. For instance, in a Coresight Research 2026 retailer survey, 83% of retailers said they have customer service AI in production, 77% said they're using AI in fraud loss and prevention, 72% said they use it in supply chain optimization and 63% in in-store operations.
When it comes to grocers' return on their investments in AI, "the best-quantified, fastest-payback evidence is in store execution and fresh-food supply chain," said John Mercer, Coresight Research's head of global research and managing director of retail research.
For Albertsons, the company's plans for AI have the support of those at the top, Whitman said during the earnings call. She pointed to AI as a fundamental piece of the company's long-term competitive strategy, as well as Albertsons' commitment to integrating advanced technology like AI into physical store operations.
"We've built a strong e-commerce platform and see AI as critical to our success," Whitman added.
This article was originally published on P2PI sibling brand Progressive Grocer.
