Although he now presides over the helm of America’s second-largest grocery store chain, Albertsons CEO Vivek Sankaran has come a long way from his humble beginnings on the other side of planet Earth, in India. The community he grew up in featured families from all over the culturally diverse South Asian nation; neighbors spoke different languages, practiced various religions, and ate unique foods.
“This is common in a lot of Asia, there are usually more people than there is space,” he says while describing his hometown. “There’s a lot of chaos, you live with a lot of chaos. Whether its the traffic or the uncertainty, it’s less about rules and more about finding ways to deal with that chaos.”
Being raised in this sort of hectic environment, two business-related skills Sankaran naturally garnered early on were the abilities to manage amidst chaos and build meaningful bridges. “You learn to build bridges with people who are very different from you. I think that’s important, it’s an asset and something leaders have to do, build bridges and find common ground,” he explains.
University of Michigan
Vivek Sankaran graduated from the Indian Institute of Technology (IIT) Madras in 1985 with a Bachelor’s degree in Mechanical Engineering. IIT Madras is a public technical and research university located in Chennai, Tamil Nadu, India.
After receiving this first degree, he started working as a photocopier service engineer for Xerox. “I can still fix a photocopier today,” he maintains with pride.
An inspired young man, he came to America to attend Georgia Tech, where he earned a Master’s degree in Industrial Engineering by 1988. Sankaran worked for four years as a manufacturing engineer at a Belgian company called Bekaert and got his MBA from the University of Michigan in 1993.
The Career of Vivek Sankaran
Over the course of his 14-year tenure at McKinsey & Company, which began around 1995, Sankaran served various Fortune 100 companies from all over the world as an advisor with a focus on strategy and operations.
“What’s amazing about America, and since I came here, it’s something I’ve had to learn, is that the ultimate currency here, in business, is impact,” he explains. “Whether you as a leader can have an impact, make a change, deliver what you’ve committed to delivering at any point of your career; that’s a very important “i” word, impact.”
The right people started taking notice of Sankaran’s exceptional business acumen, and by 2009, former PepsiCo CEO Indra Nooyi offered him an executive position within her bubbling soda corporation. Making the career shift between consulting and actually doing – potentially even suffering real-life consequences in the process – is a huge leap to take, a risk even.
Nonetheless, Sankaran accepted his new role as PepsiCo senior vice president of corporate strategy and development and worked in New York for about two years.
“I always tell people, if you don’t have butterflies in your stomach when you’re trying to take on something, you probably aren’t taking on enough risk,” he says. “Every time those opportunities come up for you, take them on!”
Frito-Lay North America
Vivek Sankaran was transferred to the Frito-Lay North America (FLNA) outfit within PepsiCo in 2011. His new post involved leading field operations for Frito-Lay’s South region, where he had the opportunity to master the operating side of the business.
This change in responsibility also brought with it a big move from New York to Frito-Lay’s headquarters on the outskirt’s Dallas’ metro area. He and his wife were terribly unsure how stable or secure his new job would be, so they decided to rent a temporary home, rather than buy one.
“When we first came here [Dallas], I told her there was a 50 percent chance I’d be fired,” Sankaran said during an interview with D Magazine. “Most consultants don’t end up being good operators, and Frito-Lay is a demanding operating environment…After four years, I came home one day and said to my wife, ‘Hon, I think we’re good.'”
Frito-Lay North America had already been considered a $13 billion “perennial rock” in PepsiCo’s portfolio. One major investor, Donald Yacktman of Yacktman Funds, went so far as to suggest PepsiCo rename itself Frito-Lay to reflect the growing importance of that business, and others like Nelson Peltz and Relational Investors agitated for it to uncouple the snacks business from the drag of its beverage operations.
Finding himself standing at the corner of desire and destiny, where preparation inevitably meets opportunity, Sankaran proceeded to make his presence within the rapidly growing potato chip maker irreplaceable. By 2012, he was appointed chief customer officer for FLNA, and two years later, promoted to chief commercial officer.
As Sankaran navigated up the corporate ranks, Frito-Lay pushed to increase its market share in the more affordable low-end and healthier high-end snacks segments.
“Demographics, the aging population and changing ethnic mix, and bifurcating income are the trends reshaping the way people are eating,” said Ann Mukherjee, chief marketing officer at Frito-Lay North America. “We’re snacking more often during the day, and we’re looking for snacks that are more satisfying physically and healthier.”
In 2016, Sankaran was tapped to lead significant parts of the $15 billion snacks division when PepsiCo management appointed him president and chief operating officer of Frito-Lay North America.
“I’ve realized how much I didn’t know as a consultant,” he ponders, reflecting on his career’s rise to the heights of American enterprise. “I’m learning all the time about the art of management, and that’s a really exciting journey for me personally.” One of the first things Sankaran did, in pursuit of becoming a better leader, was figure out what he is good at, and more importantly, what he isn’t good at – something that “takes a little bit of courage” to admit, he adds.
“I help people understand why we are doing it, how we are doing it, and why it’s important that we stick with it,” Sankaran says, whilst also acknowledging that he wouldn’t get very far were he not surrounded by a team who’s strengths exceed his own in numerous areas. “Ultimately, there’s very little I can get done by myself. Any leader in my type of role can only do things through other people.”
Under his watch, FLNA made its premium products, such as Stacy’s Pita Chips and Sabra, available in high-end stores (e.g. Citarella) and the deli sections of grocery chains in order to create the right perception of these products.
Forbes notes, at the bottom end of the segment, FLNA pushed Cracker Jack as a brand offering high value for money while also making Taqueros available in dollar stores and other retail outlets that typically attract value-seeking consumers.
Between 2016 and 2018, FLNA saw its revenues increase from $15.5 billion to $16.3 billion, at a CAGR of 2.5%, making them the fastest-growing segment within PepsiCo and responsible for approximately a quarter of their parent company’s revenue. By December of the latter year, Vivek Sankaran was named CEO of PepsiCo Foods North America.
Operating profit in the FLNA division grew 5% over the course of 2019, reflecting productivity savings and net revenue growth, which were partially offset by operating cost increases and higher advertising and marketing expenses. FLNA revenue increased 4.5% for the year.
“Frito’s results were driven by the investments we made in innovation, marketing and consumer insights, supply chain and manufacturing and go-to-market capacity,” said Ramon Laguarta, chairman and chief executive officer of PepsiCo. “This included a double-digit increase in advertising and marketing spend, additional plant, warehouse and distribution center capacity, and additional routes, racks and selling resources.”
Although his years of decision-making within FLNA surely influenced the remainder of the outfit’s annual financial performance, it’s imperative to document that Sankaran left FLNA and PepsiCo altogether in April 2019.
Albertsons Chief Executive
The announcement came from Albertsons on March 29, 2019, that Vivek Sankaran, then Chief Executive Officer, PepsiCo Foods North America, had been appointed President and Chief Executive Officer of Albertsons Companies (subsidiaries include Safeway, Vons, Pavilions, and more) effective April 25, 2019. He was succeeding Jim Donald, who had been Albertsons CEO for just six months.
“Vivek brings a rare blend of CPG, retail, manufacturing, logistics, technology, and research and development to Albertsons Companies, all of which are key components to being a successful retailer in an Omni Channel-driven environment,” Donald said in a statement. “Moreover, Vivek has the keen understanding that the front line is directly linked to the bottom line, and I’m confident he will inspire and engage our 270,000 associates across our stores, support offices, manufacturing facilities, and distribution centers.”
In the few years leading up to Sankaran’s assuming the helm of one of the largest food and drug retailers in the United States, Albertsons experienced steady annual revenue growth, however, did notably fumble a Rite Aid merger deal worth $24 billion dollars in August 2018 as well as an attempt at IPOing in 2015.
Nonetheless, Albertsons pressed on and continually sought ways to improve its value to customers – like in early 2019, when the grocer announced a partnership with Microsoft aimed at upgrading technology and improving the grocery shopping experience in their 2,252 stores spread across 34 states and the District of Columbia.
“It is a great privilege to join a company that has such deep roots in American retail,” Sankaran remarked when the news of his departure from PepsiCo broke. “Albertsons, Safeway, Vons, Jewel Osco, Shaw’s, ACME, Tom Thumb, Randall’s, United Supermarkets, Market Street, Pavilions, Star Market, Haggen and Carrs – all of these banners and more in the Albertsons Companies family of stores have hundreds of years of combined history. Our stores are integral to the lives of millions of customers each week.”
Albertsons Navigates the Pandemic
Ten months into his tenure as chief executive, Sankaran encountered the COVID-19 pandemic and while most corporate executives were shifting employees to remote work, he stressed over how to keep his fellow 270,000 teammates safe as essential operations persevered literally in the face of a deadly virus.
“We had to be there to feed at least the communities that we operate in. To do that though, we focused first on the safety of our people. I obsessed about it even before the CDC would come out with the recommendations,” Sankaran told Fortune’s Leadership Next podcast, adding that it took almost six weeks before the government issued some safety guidelines. “What we found is when people felt safe operating and working in our stores, they made our customers feel safe.”
Examples of practices Albertsons immediately implemented at every store include the deep cleaning of its locations, openly providing hand sanitizer, putting plexiglass up in front of every cash register, and in certain markets, containing the number of people that could enter the store.
Even though these procedures may have been a bit of an inconvenience, Sankaran maintains they gave employees and customers alike the comforting sense that the company, although not very much was understood about the disease at that time, cared enough to do as much as they could to save lives with the information they did have.
Structured to recognize the hard-working team members on the front lines, the company’s e-commerce pickers and drivers, store associates, distribution center associates and manufacturing plant associates began receiving a temporary $2 per-hour-worked increase on March 15, 2020, above and beyond their regular hourly pay and overtime.
“These times are unprecedented in the grocery industry,” Sankaran commented. “This simple ‘thank you’ doesn’t seem like quite enough – and we hope our sincere appreciation with this program is a start.”
Soaring Annual Sales
Albertsons got a boost in transactions throughout 2020 as Americans stocked up on groceries and cooked more at home during the pandemic. Sales and other revenue peaked at $69.7 billion during the 52 weeks ended February 27, 2021 (“fiscal 2020”) compared to $62.5 billion during the 53 weeks ended February 29, 2020 (“fiscal 2019”).
The increase in sales was primarily driven by the company’s 16.9% increase in identical sales, partially offset by lower fuel sales and the extra week in the fourth quarter of fiscal 2019. Identical fiscal 2020 sales also benefited from the company’s 258% growth in digital sales and 865% growth in Drive Up & Go (DUG) curbside pickup sales. The term “identical sales” includes stores operating during the same period in both the current fiscal year and the prior fiscal year, comparing sales on a daily basis.
“Stores still matter,” Sankaran said while speaking with CNBC’s Squawk Alley. “A lot of customers shop stores and use the delivery and it’s the combination that makes it really powerful and we’re betting on that.”
Thus, Spring 2021 saw Albertsons further engage Microsoft Consulting Services to help migrate its on-premises datacenter to Microsoft Azure. Accelerating modernization plans on the heels of unprecedented digital growth, the grocer is planning to reduce costs while leveraging inherent Azure capabilities such as scalability, flexibility, resiliency, and agility.
On June 21st, 2021, Albertsons and DoorDash announced a key partnership aimed at offering convenient, fast, and reliable grocery delivery from nearly 2,000 select stores. Consumers located near these stores can now order groceries and essentials on-demand for delivery within an hour through DoorDash’s top-rated marketplace with no time slot, queues or minimum order size required.
“We are committed to expanding our delivery experience in order to meet our customers’ needs whenever, wherever and however they want,” said Chris Rupp, Chief Customer and Digital Officer, Albertsons Companies. “Our partnership with DoorDash is the next step in our digital transformation to help make our customers’ lives easier and help answer the perennial question, ‘What’s for dinner tonight?'”
The Successful IPO
Albertsons began trading on the New York Stock Exchange under the ticker “ACI” in June 2021. The grocer debuted at a lower-than-expected $16 per share, below its $18-$20 target range.
When asked by Super Market News what made this IPO successful, compared to the previous attempts, Vivek Sankaran responded, “There are myriad factors. The last time, in 2015 [following the Safeway merger], there were some market forces that took the wind out of the sails. And, interestingly, when you think about it, we just IPO’d the company in one of the biggest crises we’ve faced in humanity.”
“And in this crisis, certain investors said, ‘Oh, I could get into [this company].’ I think it works because we’re also a stronger company. And I think for investors, they’ve seen that we actually did put Albertsons and Safeway together in a very effective way,” he continues. “It started out having to believe in it, and then there was the proof that we did it. And we are a stronger company and are the performing in the marketplace that way. That contributed to it, I’m sure.”
Since IPOing, Albertsons’s stock value has nearly doubled from $15.45 per share to $29.66 per share as of early October 2021. With regards to what the future has in store for America’s second-largest grocer, we encourage readers to view the recently conducted interview below, between Yahoo Finance and Albertsons CEO Vivek Sankaran:
If you enjoyed learning about the life story of Albertsons CEO Vivek Sankaran, be sure to check out our biography of Kroger CEO Rodney McMullen!