Albertsons sales forecast cut as lower-income shoppers trade down

Albertsons cut its sales forecast for fiscal 2026 after reporting that lower-income grocery shoppers are becoming more cautious, shifting purchases toward cheaper products and smaller-value choices. The grocer now expects sales to fall between 1.5% and 0.5% for the year, compared with its earlier outlook for flat sales to growth of 1%, according to results released Thursday.

Chief Executive Susan Morris told analysts on the company’s earnings call that customers are moving toward private label items, value packs and lower-cost protein options. She described demand as split by income level, with higher-income customers showing more resilience while lower-income households make clearer substitutions at the shelf.

The revised outlook points to a broader pressure point for food retailers: even when consumers keep buying groceries, the mix of what they buy can weigh on revenue. When shoppers trade down, a basket may contain more store brands or lower-priced ingredients, which can reduce sales growth even if trip frequency remains steady.

Why did Albertsons cut its sales forecast?

Albertsons attributed the weaker outlook to softer spending patterns among lower-income customers and continued pressure from supplier price increases. Morris said the company is seeing customers choose less expensive alternatives in selected grocery categories, including cheaper proteins.

Private label products are goods sold under a retailer’s own brand rather than a national manufacturer’s brand. For grocers, they can help retain customers looking for lower prices, although a shift in product mix can still affect reported sales depending on pricing, volume and margins.

Albertsons also said higher supplier costs remain a factor. The company did not present the sales revision as a collapse in grocery demand, but as evidence that parts of its customer base are adjusting behavior in response to household budget pressure.

Consumer pressure remains uneven

PYMNTS Intelligence research cited by PYMNTS found that 83% of surveyed consumers said everyday prices had risen. Nearly two-thirds said outside forces were affecting the U.S. economy a great deal or a lot, and 58% expected broader economic forces to affect their own finances over the next six months.

The same research found that 38% of consumers planned to reduce spending over the next three months. PYMNTS wrote that households may not be making spending choices along the same category lines used by economists, merchants or card issuers, but according to their own priorities.

That distinction is relevant for grocers because food is a recurring purchase, but consumers can still reduce cost within the category. They may change brands, pack sizes, meal choices or protein types rather than stop buying groceries altogether.

Digital sales keep growing

Albertsons said its digital business remained a growth area in the first quarter. Digital sales rose 13%, and digital penetration increased to nearly 10.5%, according to the company.

Morris said the company’s loyalty program is helping personalize offers and improve customer engagement. She said loyalty members who are engaged with the program shop more often and have higher average baskets than non-members.

The company also said flash delivery remained the fastest-growing part of its digital operation. Morris said Albertsons’ eCommerce business was profitable in the first quarter, describing that as evidence that the grocer is expanding digital sales while improving the economics of the platform.

This story draws on original reporting from PYMNTS.