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Albertsons succeeds by sharing decisions, doing right by people

The Albertsons at State and 16th Streets in Boise, built on the site of Joe Albertson’s original 1939 store.
The Albertsons at State and 16th Streets in Boise, built on the site of Joe Albertson’s original 1939 store. doswald@idahostatesman.com

How does a company grow from 10,000 to nearly 300,000 employees in four years? The direct answer is “by merger and acquisition.” The more interesting reply is “through a deep trust in people and giving away control.”

Once a Boise business icon, Albertsons had shrunk dramatically by 2013. Albertsons LLC had just 192 stores and $4 billion in sales. Its sister Albertsons stores in Idaho and other states had taken a disastrous trip through SuperValu ownership. One business writer called Albertsons LLC the “undertaker of the grocery business,” assuming it acquired stores for their real estate value and would then close them.

Today, Albertsons Companies Inc. has 2,300 stores, $60 billion in sales and may be about to make another acquisition, according to press reports. It operates under 18 banners, many formerly successful but recently distressed. Faced with withering national competition, how is this supposed to work?

One egocentric strategy would have been to rename all the acquired stores “Albertsons” and mount a big branding campaign. CEO Bob Miller chose the opposite: Keep all the chains’ names and rebuild their former loyalty. Provide patient capital. Decentralize. Keep management and staff in place. Give wide discretion to regional and local staff, including pricing.

When honored and trusted in this way, people become powerful, Albertsons believes. Stores begin to look and feel different. Executives choose to stay or compete to get in. Customer satisfaction, measured monthly, is now at the high end for the industry.

Acme’s, for example, was once a trusted name in Philadelphia until going through four miserable ownership changes. When told Bob Miller’s philosophy, the Acme union’s leader said he’d heard it all before. Now he says Miller has been true to his word, and Acme’s is thriving.

This is not Joe Albertson’s company. Its principal owner is Cerberus, the giant investment firm that once owned Chrysler and GMAC. A merger with Safeway provided the big growth spurt. Although the revived Albertsons put its name on Boise State’s blue turf, it won’t be building a Simplot-like complex anytime soon.

However, there may be a monument of another sort that Miller’s mentor — Joe himself — would recognize: Work backwards from your principles. Do right by your people. Share decision-making.

No guarantees, but so far, it’s working.

Jerry Brady is a member of Compassionate Boise, which encourages compassion in all aspects of life. jbrady2389@gmail.com. This column appears in the Dec. 21, 2016-Jan. 17, 2017, edition of the Idaho Statesman’s Business Insider magazine. Click here for the e-edition (subscription required).

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