Vivek Sankaran in atypical role for IIT grad as CEO of U.S. retailer Albertsons

Albertsons announced today that it earned $850 million in fiscal 2020, nearly double that in 2019. The U.S. food and drug retailer had $70 billion in revenues in 2020. The company is “well positioned for continued success and strong performance in fiscal 2021,” said Vivek Sankaran, chief executive in a statement.

The retailer operates stores in 34 states under Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Amigos and fourteen other banners. These stores face stiff competition from Walmart, which operates more than 5,300 stores in the U.S., that sell food items and drugs at low prices compared to its rivals.

Also, while Albertsons’ online sales expanded over the past year, spurred by the pandemic lockdown, both Walmart and Amazon are strong, major operators in this sales channel.  

Albertsons, which traces its roots back to 1860, has its main office in Boise, Idaho. It was taken private by Cerberus in 2006. Albertsons has a market value of $8.4 billion and $8.1 billion in long-term debt and other liabilities.

Since 2015, Cerberus, a New York based private equity firm, was trying to take the retailer public, according to CNBC. Albertsons went public in June 2020 with the initial offering price reportedly cut to $16, down from a $18-$20 target range.

Nearly a year later, the stock now trades at $18, up about 12% from its initial listing price. Cerberus, which manages $53 billion in funds, owns 33% of Albertsons.  

At the time of the public listing, Vivek Sankaran, Albertsons chief executive, owned 1.9 million shares, worth about $34 million. He will receive additional shares if the company meets certain financial targets. In fiscal 2019, he earned $4.1 million in salary and bonus. Sankaran, 58 years-old, joined Albertsons as CEO 14 months before its public listing last year.

In 1993, after an MBA from the University of Michigan’s Ross Business School, Sankaran joined McKinsey & Co. where he stayed for 15 years. As a partner at the consulting firm, he co-led the North American purchasing and supply management practice and was a leader of the North American retail practice.

In 2009, he joined PepsiCo as the chief strategy officer, accepting a job offer from Indra Nooyi, a fellow Indian-American who was then CEO of the beverage and snacks company. He worked at PepsiCo for ten years, including as CEO of its North America food business Frito-Lay, which had $15 billion in sales and 55,000 employees.  

When he was appointed head of Frito-Lay, he told his wife there was a 50 percent chance he would be fired, according to DMagazine. "Most consultants don’t end up being good operators," since leading, versus advising, requires a different skill set and because consultants know very little about business operations. Sankaran says he is eager to learn "all the time about the art of management."

He serves on the board of Safe Water Networks which provides clean, cheap water to millions in India and Ghana. The New York based philanthropy was founded by the late Hollywood actor Paul Newman.

In 1988, Sankaran earned a Master’s in Industrial Engineering from Georgia Institute of Technology. He graduated with a BS in mechanical engineering from the Indian Institute of Technology (IIT), Madras, in 1985.

Most IIT graduates in the U.S. pursue careers at technology companies or work in engineering roles at other companies dealing mostly with technical and other white collar staff. So, as CEO of retailer Albertsons, Sankaran has taken on an atypical business challenge for an IIT graduate. Also, he faces a similar challenge, as he did at PepsiCo, of motivating a blue-collar workforce of store clerks, delivery truck drivers and warehouse staff. “We are blue collar, but overachievers…I especially love seeing (people) do things they couldn’t think they could do,” he said in 2018 while at PepsiCo.

Sankaran told DMagazine that as a business leader he surrounds himself with others who have strengths in areas where he is weak. This is because, when he switched from consulting for McKinsey to operating a business at PepsiCo, he realized it was more important to figure out what he isn’t good at —something that “takes a little bit of courage” to admit.  

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