Albertsons Cuts Back

Oct 10, 2003

By George Anderson

Albertsons chairman and chief executive officer, Larry Johnston, told the Idaho Statesman a little over a month ago that the company was doing business in one of the “toughest
competitive environments we have seen.”

The consequences of that situation became unflinchingly real to a number of employees yesterday when the chain announced it was laying off an undisclosed number of people at
its headquarters office in Boise.

To compete against the likes of Wal-Mart, Albertsons has been aggressively looking to reduce overall operating costs while simultaneously stepping up promotional activity.

Albertsons recent action and the prospect of walkouts by store-level employees in California and Missouri has thrown greater attention on the costs of doing business in the supermarket
industry and competing with a host of competitors, most notably Wal-Mart.

Bob Toomey, an analyst with RBC Dain Rauscher in Seattle, said other grocery operators were in the same boat as Albertsons. “They’re not alone. Its competitors are facing the
same situation. It’s a broader issue with the grocery industry.”

Moderator’s Comment: What specifically does Albertsons need to do to improve its competitive position? Does it have strengths it is not fully leveraging?

Looking back on the discussion from yesterday on Lester Thurow’s book; Wal-Mart changed the business model for retailing. Will Albertsons and others be
able to compete if they do not change their business model as well?
Anderson – Moderator

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