Business Strategy and Outlook
| Zain Akbari, CFA |Although the pandemic has provided a financial respite, we remain convinced that the long-term environment for the grocery sector will feature intense price competition, high customer expectations, and more costly fulfillment (particularly delivery). With Walmart battling Amazon for national supremacy, traditional grocery leader Kroger building a highly automated delivery fulfillment network with Ocado, and the hard discounters boosting their presence, we believe Albertsons will be hard-pressed to defend its returns on invested capital (14% on average in fiscal 2020-21, but only 7% on average in fiscal 2018-19; includes goodwill).