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Interesting piece in Business Week about Albertsons CEO Larry Johnston, in which it notes that he was lured from General Electric by a company he viewed as “broken” – inefficient and increasingly disconnected from customers.

Johnston has now been leading Albertsons for almost four years, and has been cutting some $1 billion in costs while spending an almost equal amount upgrading the company’s technology infrastructure on both the front and back end. He has closed hundreds of stores, and has imposed greater managerial and financial discipline. Still, the Johnston regime gets only mixed reviews because the company’s profits seem to only be coming through cost savings, not increased sales – which isn’t good enough at a time when Wal-Mart’s grocery sales are growing.
KC's View:
We get a surprising amount of email about Albertsons and Johnston, even when the company isn’t making news. There’s no question that Johnston has both supporters and detractors, and it seems to us that the time is coming when he will have to demonstrate sales growth – not just savings – if he is to keep the detractors at bay.

Johnston, when talking about the new hand scanners that he’d like to have in every one of the company’s stores in less than two years, says that “the new technology not only allows us to be more efficient, but it also allows us to connect better with customers at the most intimate levels."

Maybe so. But intimacy can be defined two ways. Will it give Albertsons’ a more intimate view of its customers’ shopping habits? Certainly – assuming, of course, that it does more than just compile data. The retailer also has to find ways to use the data that are effective without being intrusive.

But while this may increase Albertsons’ familiarity with its shoppers, it won’t necessarily make shoppers feel more intimately connected with the retailer. For that, you need to create an ever more compelling shopping experience, one that touches the consumer’s needs in a variety of different ways. Emotionally. Intellectually. Nutritionally.

The danger here is that Albertsons is thinking like a retailer, not like a customer. And that’s not the way to achieve the kind of intimacy that helps a retailer rise above the competition.